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I'm making a story (multiple projects or "chapter" as I call them.) from a sim game and have to use a separate hard drive (USB) to store the Audio/Video files used due to computer HD space limitations. When I open up each project, I have to wait a very long time for the project assets to load and even then, I still get playback hesitation when I play the project, almost as if the assets have to still be loaded. Is there a suggested location to store project assets so this doesn't happen?
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Most likely the program is having trouble reading the codec for whatever software you used to record your game.
I'd recommend you consider another software, like CyberLink PowerDirector, that includes both a screen recorder and a more versatile system for reading video files like this.
But if you'd prefer to use Premiere Elements, please open your video in the free download MediaInfo, set View to Text and copy the text of this report and past it to this forum. With this detailed report we'll better be able to recommend how to convert the file to a more compatible codec.
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Connected via usb 2 (not fast enough) or 3?
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What size and how much free space is on the internal drive?
Is it an HDD or SSD?