Thanks for providing that information..
So far a possibility would be the size of your internal hard drive. If you are just using this one drive, it may be rather full. How much free space is there on your 80gig drive?
You can try using your external drive. Go to Preferences (press F6), and then set the working folder to a folder on your external drive. I use 2 internal drives, 1-200 gig, and 1-250 gig. I also have a 500 gig external USB drive.
It appears as though you copied down the Project settings and not any video file properties. Try right-clicking on a video file that you captured, either in your Library or your Timeline. Those properties and your project properties should match.
If your internal drive is rather full, then try moving some files over to your external drive to free up some space. Video editing requires a massive amount of real estate to edit. While editing a rule of thumb is to allow for at least double the file sizes of the video being worked on.
Next is to make sure you are allowing the maximum amount of resources to be devoted to your editing. Having other applications running, even in the background will steal those from VS. Shut down instant messenger apps, antivirus, spyware. You might want to review Steve's tutorial on
Creating a Video Editing Profile.