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The project file does not save the actual source media, but instead acts as a shortcut to the files.
That is why you can't delete them and still use the project.
See a better explanation of this by John T Smith here:
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Did you move or delete the source files from you project?
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Did delete original videos after editing. Here is a picture of what replaced my edited project, did not know that it has to be rendered to be saved
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Deleting video from your hard drive mean also deleting then from your Elements project; hence the RED offline images.
Elements does not acutally import video but makes links to the files on the hard drive when you add assets to your project.
Deleting the video files on the hard drive means breaking those links.
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The project file does not save the actual source media, but instead acts as a shortcut to the files.
That is why you can't delete them and still use the project.
See a better explanation of this by John T Smith here: