Still getting Display Error in PE8: "Display performance will be poor due to Incorrectly..."

I recently updated my OS from Windows Vista (32-Bit) to Windows 7 (64-Bit).  When working with PE8 in Windows Vista, I would receive the following error (signified by a red X in the lower left hand corner of the screen) whenever opening an existing project or creating a new one "Display Performance will be poor due to incorrectly operating graphics card or driver!"  To my consternation, I'm getting the same message after updating my OS with a CLEAN INSTALL of Window 7 64-bit.  I have the latest, stable Nvidia card driver 196.21 and have installed the latest patch from Adobe 8.0.1.  I'm interested to see if anyone is having this reoccurring GPU-incompatibility problem after installing the new patch.
Any solutions that don't involve simply turning off GPU playback are much appreciated.
As this is not a "workflow" problem I don't see the need in displaying an exhaustive list of all of my Computer assets.  However, here are the basics.:
Computer: HP Pavillion M9150f
Processor: Intel Quad-Core Q6600 2.4 GHZ
Ram: 8 GB
Video Card: Nvidia GTS 250 1gb Ram, Latest WQHL Nvidia Driver 196.21
I have no other Video-Editing software installed, not even windows movie maker.
Any help with this problem would be much appreciated.

Adobe's silence on the issue leads one to believe they simply cant fix it.
That could well be a reason. However, if history is any indicator, Adobe is always tight-lipped about any plans, or works in progress, until they are ready for "prime time." Recently, a lot of podcasts and blog-spot pieces began appearing on changes in PrPro CS5. Many of these are directly related to GPU acceleration with certain nVidia cards, and a totally new render engine, Mercury. Still, other than some observations from select personnel, and a few demo videos, the complete details have not come forth. Also, there has been caution that Mercury might NOT make it into CS5. Only time will tell. So silence is not new from Adobe, and there could be various reasons for it, from re-coding being an impossible task to the patch/fix not being quite ready for release. PrPro CS4 got three significant updates, plus updates to Encore and AME. It was only about one week before those releases, that a single word hit the fora.
Good luck,
Hunt
HERE was the "sneak peak" on Mercury.
HERE is a thread on nVidia support for it.

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    One last thing.  PE4 utilized my GPU, I downloaded the latest trail version of Cyberlink's Power Director Software and it utilized my GPU, even windows dvd maker uses my GPU...However, I've spent a lot of time with PE4 and I love the features and the interface and would rather work with the latest from Adobe.  I'm using PE8 for a lot of video projects and I don't want to have to waste time watching it take 2 hours to render a DVD when PE4 did the same project in 45 minutes.
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    It could be that the message is benign. Premiere Elements does not use your graphics card to render your video. That's a function of your processor.
    Your graphics card effects your onscreen display only. So, unless you're seeing a significant drop in the quality or function of your onscreen display, I wouldn't worry about it. (The program is likely switching automatically to a compatibility mode.)
    It could be that a Windows Update is conflicting with something in your graphics card's driver -- and it will eventually be corrected in a later driver release.
    So, unless your display is degrading when the program switches to compatibility mode, just ignore it and keep working.
    Version 8 is a massive resource hog and, for reasons I can't figure out, takes twice as long and uses twice as much power to accomplish the same things that previous versions accomplished using very little power. I'm not sure what Adobe's strategy is with this.

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    Thanks for your response. My notebook has a 7200 RPM 500 GB hard drive with about 320 GB free. The .avi files were brought in to PrEl from a WD Passport external drive with about 60 GB (of its 400 GB capacity) free. The project was also being saved to the WD drive.
    I have a Windows 7 64-bit system. I have all the latest versions of my NVidia graphics card driver and Quick Time. I also downloaded the PrEl 8.0.1 update from Adobe. Hardware/software-wise, I'm pretty sure I'm in good shape; I'm thinking there might be some settings that I might want to play with.
    The camcorder is a very basic Flip Video USB camcorder by Pure Digital Technologies (Model #: F260W). It records in .avi format; when you plug the USB in, you can access an application that allows you to save the videos. I use this to save them to the local drive (C:) and then I copy the .avi files from there to the WD Passport. The Passport drive is where I bring in the media into Premiere Elements, to keep space free for the OS to run smoothly.
    The project is set up this preset: NTSC > Hard Disk, Flash Memory Camcorders > Standard 48kHz. As stated earlier, the error message shows up pretty much instantly. To be exact, it shows up about 5-30 seconds after I start a project. Unrendered clip previews playback fine. The raw .avi files also play fine in Windows Media Player. The glitching occurs after clips are rendered.
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