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Getting AVI in Premiere Elements

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I just got Premiere Elements in the mail (bundled with Photoshop Elements). I'm trying to do some edits--right now, just some test clips. The problem is, I can't get it to accept the AVI file I'm making. Once I installed Quicktime, it accepted an MPEG version, but the audio was out of sync, and the Help documentation said using MPEG can result in that. Of course, even without those problems, once I get to doing a full edit, I'm going to need AVI so I don't have junky picture quality. I first tried ripping the video with SmartRipper (although I'll probably end up giving DVDDecrypter a shot as well). I then tried encoding it into AVI with Super. I selected the ouput container as AVI, the output codec as DIVX, and then given the choice between ffmpeg and MEncoder, I have MEncoder (I have no idea what that means.). Could I have the wrong settings? Do I need to download a codec? Should I use a different encoder to turn the .vob file into an AVI file? Any help would be fantastic. Thanks!

EDIT: The error message I received is this: Unsupported format or damaged file/One of the necessary components may not have been installed. I don't know if that helps, but I just realized I didn't post it.
Two-Face - A Batman:The Animated Series Movie
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It looks like that may help me. What's M2V? My real problem is that I'm using SUPER to try to get an AVI file from my .vob file I got from SmartRipper, and Premiere Elements isn't accepting it. I apologize, I'm not immensely knowledgable about this. I was under the impression that I need to edit an AVI file for the best video quality. Is this not the case?
Two-Face - A Batman:The Animated Series Movie
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Glad you figured it out, but to answer your questions above:

M2V is an elementary MPEG-2 video stream - what you get when you de-multiplex the video out of the VOB files. Ideally you want to get this into your editor without having to put it through a lossy encoder.

The Mainconcept plug-in allows you load in the M2V directly. The AviSynth/DGDecode approach tricks Premiere into thinking that the file is an AVI. If you are going to save the video into an AVI, don't use DivX, use a lossless codec like Huffyuv or Lagarith. Using VirtualDubMod or VirtualDub-MPEG2 for the conversion would be better than using Super, IMO.

BTW I've never actually used Premiere (Elements) myself, so any advice from those who have would be welcome.

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I see. Yeah, I ended up using VirtualDubMod. Thanks for clearing that up! And yeah, if anyone using Premiere or Premiere Elements (preferably the latter) has any methods they use or any more detail, that would be great, just to be sure.
Two-Face - A Batman:The Animated Series Movie