Assembling still photos and video clips into one video presentation.

This is partly a Photoshop Elements and Premiere Elements (both version 7) question, so hopefully not posting to the wrong group (there doesn't seem to be a Premiere Elements forum anyway)!
I am currently putting together a video/slideshow presentation, initially for display directly from a computer (to data projector) and then ultimately to end up on a DVD.  The presentation  consists of digital and scanned photographs (prints and transparencies) and video clips.  I successfully put together a slideshow of all the stills with Photoshop Elements, inlcuding music etc.  I then output the slideshow to Premiere Elements, so that I could merge it with my already edited video clips.
The output process works smoothly enough, but as soon as I run the completed presentation, the quality of the imported slideshow is nothing short of woeful!  Each image is badly pixellated and all the transition effects are mangled - in short, it is unwatchable.  As it turns out, simply adding a single, still image to Premiere Elements results in a very poor final image.  Drop the exact same video clips and still images into Windows Movie Maker and the quality is spot on (as is playing the slideshow after outputting it as a WMV file and playing via any player capable of playing WMVs).
Trying to go the other way, ie importing video clips into Photoshop Elements, pretty much always results in it crashing!
The two products are marketed to "work together", but they are an abject failure in this regard!
OS is 64 bit Vista Ultimate.
I've tried searching the manuals and online help, but could find nothing of any help.  I've sent an e-mail to Adobe support, but have received no response from them (after three weeks).
I'm hoping that someone may be able to point out something that I may have missed, or offer some tips and tricks.
Thanks.

There is a separate forum for Premiere Elements at
http://forums.adobe.com/community/premiere/premiere_elements
Also, my favorite place for Premiere Elements questions (including slideshows) is a site started by some Adobe Premiere Elements forum regulars at http://muvipix.com/phpBB3/index.php   Forum signup is free. There are multiple subforums at that site and because most of your questions are Premiere elements, I suggest that you post under the "PE version 7" subforum.
Wherever you decide to post, I suggest that you include in your post my comments and the answers to the questions that I asked here.
1 -- It has FAQs over to the right of the thread listing on the Adobe Premiere Elements forum. One of those FAQs that is relevant to your current workflow is
What resolution should my photos be in Premiere Elements?
http://forums.adobe.com/thread/431851?tstart=0
2 -- Also, I suspect that you used Pan and/or Zoom on some of your photos when creating the Slide Show withinn Photoshop Elements.
For those photos, you want the Premiere Elements setting of Scale to Framesize set OFF.
3- There are also other considerations such as
-- which Project Setting you are using in Premiere Elements?
-- what dimensions are you using when you export from Premiere Elements to the WMV file?
-- what is the resolution for the projector on which this video will initially be displayed?
4 -- I do agree with your approach of adding the video in Premiere Elements.
5 -- The mangled transitions needs more detailed info in order to discuss.
Tthe timing of transitions is definitely different between the Photoshop Elements slideshow editor playback and the Premiere Elements output: this gives some people serious problems and for others it is not significant.  I don't know yet if that is your problem.

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