I just recently installed DIVX codecs.
That is not prudent. DivX is not intended to be edited and often causes serious problems, requiring external conversion anyway. Simple rule: Never install codecs and especially codec packs, unless you are really sure what you are doing and they are considered trustworthy.
If your material is DivX, get the original material from the copyright owner. If you happen to be owner, then it is even easier.
So should I uninstall the codecs and try again?
DivX by itself is not harmful to your computer, but should not be used for editing, only playback. If your material is DivX, I repeat: Get the original material from the copyright owner in the original codec.
Well, the only reason why I got the codecs was for playback, and hoping that my issue was simply a graphics issue, and I hadn't installed something to work with it.
Update: I did uninstall the codecs, and I'm getting the same problem.
And the term I should have used was "sequence" insted of "timeline"..
Based on the info given so far, my thought here is that either your install or your system is smurfed. You can try reinstalling PP. If that doesn't resolve the issue, I'd probably look towards reinstalling Windows from scratch. Start fresh.