File > Place tells me nothing. I suspect your files must be embedded for them to be causing trouble.
If the files are linked they show up with a diagonal cross when you select them and you will see them in the Links palette.
If they are embedded you won't get the cross and your Illie file will be much heavier and more unwieldy.
Files can sometimes get accidentally embedded, for example if you have Shift Lock down or if you press Shift while placing or dragging from the Finder.
Do nor embed unless you really need to.
The PSD is linked, it has the cross.
I may be wrong but when I select "File > Place" it never embeds the image.
The only way I know how to embed is to use "File > Open".
Anyway the file is definitely linked, I finally got it to save too, just had to wait 3 or 5 minutes for it to finally write the file!
I know it has something to do with file size (at least I am pretty convinced) because in reducing the file size of the linked image, I was able to finally import it and save the AI file.
Hope this isnt a computer issue cause I certainly dont need to spend the money on a new one!!!
Of course for printing purposes it may be o.k. to use LZW TIFF, especially if you need transparency.
JPG is usually only used for work in RGB, although if you embed a JPG into a CMYK file the colours will be converted to CMYK. O.k. if you like but JPG is never transparent. Remember too that JPG is lossy so it should be used with discretion and peferably never re-saved.
PNG is (or can be) transparent in RGB but if converted to CMYK by embedding it will also loose its transparency.
And then there's the old EPS format which works well in either RGB or CMYK, but it can never be transparent.