Going back to your MTS files, how was the Audio recorded?
Is your Project Preset setup for that Audio?
Note: Adobe NLE programs, PrE & PrPro, can have issues with muxed (combined, or Multiplexed) Audio & Video files, especially with the MPEG Audio streams. When one does have issues with the muxed Audio, the best course of action is usually to rip the Audio into a separate stream, as a PCM/WAV @ 48KHz 16-bit, and then Import and replace the muxed stream with that.
The video was simply taken on simple Panasonic FT2 point and shoot camera which has AVCHD capabilities which creates MTS files.
[My othe AVCHD videos (M2TS) which do work were taken on a Canon HG10 HD video camera.]
I hope this helps as I don't have the knowledge to separate the audio form video before hand and then import them separately.
Actually, the Lumix shoots in a number of formats. Assuming you're shooting in AVCHD, it actually shoots in AVCHD Lite, 1280x720, and you should ensure that you've selected that as your project setting when you set up your Premiere Elements project.
But the bigger challenge is that this cam shoots in 60p, a format that is not supported by Premiere Elements or any other consumer video editing programs. It does not appear from the online specs that you ahve the option of switching it to 60i. If this is the case, you may not be able to work with video from this camera in Premiere Elements.
That's a problem with Panasonic's decision to use that format rather than Premiere Elements, unfortunately.
Even Kyotesoft's video converter will likely have problems working with it.
Hmmm....yes Lumix has a number of formats. These were shot in the highest AVCHD resolution that the camera can do.
Kyotesoft seemed to handle them fine as when I played the converted file it played perfectly. Just not when imported into PE7. As you say probably a Panasonic issue with 60p or something.
However, I just used Kyotesoft again after your reply and coverted the MTS files to MPEG1 rather than MPEG2. The MPEG1 files in PE7 plays fine when I drag it onto the timeline for both audio and video.
So this seems to work for me at least if I use MPEG1.