There is no one single type of AVI. There are thousands of possible codecs (compression systems) used in any given AVI, and a great many of these are delivery, not editing, codecs.
The report you posted above indicates that your AVI is using the VP60 codec. You don't say where this video file came from, but the VP60 codec is a game video codec (used in the Sims, for instance), not an editable codec like the more traditional DV-AVI codec. This type of codec is not editable in Premiere Elements and, in fact, may be difficult if not impossible to edit in any video editor. It's simply not designed to be edited.
You can try Windows MovieMaker. It's a simple program but it's possibly more versatile in terms of the codecs it uses.
You can also try converting the file to a more traditional DV-AVI or an MP4 using the free download Handbrake. However, converting video can be kind of tricky -- especially because in your case you'll also need to change the file resolution to a more traditional 1280x720 or 855x480.
But the simple fact is that this is game video, not editable camcorder video. So you're working with a format that's simply not designed to be edited.
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