When I'm shooting, MTS files are created in the camera's memory. I can copy and paste them to my PC.
If I'm using the software provided with the camera, HD writer AE 2.1, to copy the files to my PC they show as M2TS files.
PE elements 9 can work with both files.
Does anyone know the difference between these two files? Which one should I be using to create my movies?
There is no difference in the files other than the suffix.
However, as I advised you in your other post, you will only be able to successfully work with 60i and 50i video from this camcorder. Premiere Elements can not work with video shot in 50p or 60p format.