In thanking you for your reply to my problem, and now that my pc is up and running again after a minor mishap, I'm able to to respond to the the points you mention.
I can successfully import mpeg2 files into Premiere 6.5 and the total capacity of my internal hard drives is 120GB with approx 90GB of free space.

Could my problem be the large size of the avi file I am attempting to import? if so, how could I cut the file into smaller segments?

Thank you for your continued support in this respect.

With reference to my last post, can anyone advise me if it is possible to cut the 9.5GB file as mentioned. I have tried importing the file into 'ScenalyzerLive' but the file imports as a grey blank filmstrip. Desperation is creeping in! Can anyone help please.