Hello A.T.
The real world (meaning kids soccer practice ) took priority last night so I wasn't able to work on this issue too much. This evening I tried all the steps you outlined to no avail. Here are my notes from each troubleshooting task:
1. Premiere Elements 11 exhibits the same behavior which leads me to think there must be some conflicting program on my PC.
2. Creating a new catalog in the organizer was a good thought, I was hoping this might have some impact as the catalog is woven through both photoshop elements and premiere elements. Unfortunately, no luck, the problem still exists with a new empty catalog.
3. Using the Movie Menu to add content to the project also also did not make any difference.
At this point I don't think finding another way to add content to the project is likely to fix the problem. Since the problem remained after removing and reinstalling premiere elements, and the problem also exists with premiere elements 11, I'm thinking it is more likely there is some conflict with other software on my PC. I am going to start uninstalling programs and see if I have any luck with finding something that is causing the issue.
Any other idea's are welcome, thanks so much for giving your time to help!
Shawn