Not all MP4s will work as source video.
What model of camcorder did this video file come from?
Which project settings did you select when you started your Premiere Elements project?
No Camcorder was used. The MP4 video was created on a computer.
Setting: NTSC-DV Widescreen 48kHz
That, unfortunately, is the problem.
The MP4 used an unsupported codec for its audio.
You can try using a program like Super to convert it to a DV-AVI, per the specs in this FAQ.