PRE8 Mixed Media Project Issues

Problem Description: When creating a New Project and after importing a combination of video (MOD) and still images (jpeg) I get a pop up that says "Premeir Elements 8 is running low on system memory. Please save any changes to you project and close PRE" or something similar to that message.
I just don't understand what I need to do to get PRE 8 to run on my system without running out of "system resources".
I have a separate hard drive for my PRE projects so that I am not running the program on the same drive that my projects are on. Please help, I am new to Premiere Elements, but have work a little with other Adobe products in the past. I know with some of their products you have to specify scratch disks to help the software to run smoothly. Is that what I am missing? When I purchased this product I kinda hoped that it would be just a simple drag&drop, edit the files in program, add effects/transitions/audio and then compile the final video, but I have not been able to successfully create anything with PRE on my very capable system...pretty sad.
Again please help,
I have a HPE Pavilion 180T PC
Intel i7 X980 CPU
12GB DDR3 RAM
C:1.5TB
Glenn

Here is an ARTICLE on setting up one's computer for an editing session.
Here is an ARTICLE on Memory and Resources.
Good luck,
Hunt
PS - there are several useful articles in the FAQ sub-forum, to the right on the main forum screen, that tell how to set up one's computer for Video editing and also for tuning one's OS.

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