Adding new clip causes Premiere to not function properly

I've been using Premiere for some time now with no issues. However, today I have run into a most disturbing problem. If I add one more clip to my project all hell brakes loose. I can no longer see the play cursor move as I scrub through the timeline (though I can scrub). I cannot select any clips in my sequence. Clips do not show previews if I mouse over them and slide the mouse. Bottom line: the software becomes completely unusable. This is the first time we have use the dynamic link library with premiere so I thought maybe that might be causing the problem. Deleted the linked file and added the file that was causing the original problem. Everything worked... I thought the problem was solved... but adding just one more clip, again, made premiere go haywire. This is incredible aggravating as hours of work are being lost. If I minimize premiere and bring up back the screen is completely grey. Deleting the last added clip (doesn't matter what I add as a clip) return premiere to a working state. Anyone know what is going on? Please help!