The corruption you're seeing in your output is most likely because of your input. Premiere Elements doesn't digest FRAPS video well.
If you go to Tips & Tricks section of our forum, Bill Hunt has published some suggestions for working with this often-troubling codec and other non-camcorder video.
Never mind. I see that Bill has already addressed this issue in your other thread.
Please do not start a discussion in more than one thread. It's very confusing, and it often leads to a lot of crosstalk.
Did not realize that this was a dupe post. Sorry about that.
Also, as wonky as the forum has been over the last several days, it's tough to keep up with what has been said, in the various replies.
PS - I tried to just Edit the above reply, but the forum would not allow that?