Check this out Performance of 1394 devices may decrease after you install Windows XP Service Pack 2

Also beware that if you have firewire devices, and if you ever need to re-install or repair XP2, it may 'see' that you have firewire and then choose to be helpful and install a firewire network. What happens is that everything works ok on boot up, then a few minutes later the network kicks in and your devices mysteriously disappear. If this happens (man, this post was meant tot be short!) go into 'my network places' and disable the firewire network. p.s. You will find very little about this on the net: I know, for I was that cricket bat.

Yes, that was weird...

It look like I spoke to soon.
LIke I stated in the above reply...
I went out and bought a good fast external drive with the source files and everything away from the PC software and stuff and had the same issue occur again. I am starting to think that there could be an issue when encoding and using my PC for "other" stuff.

You really should take the folks at Adobe seriously when they tell you that you need to have the program and OS on a fast internal drive, and then all your workfiles on a separate fast huge internal drive -- as they specify on their system requirements page for all packages. Don't even try using an external drive for anything except backup -- the bus just isn't fast enough to handle HDV unless it's eSATA.

And never, NEVER, run any other programs when you are capturing or rendering. You shouldn't even have them on your edit PC. No Internet, no virus checker. Premiere is the fussiest program ever and will cause you tons of grief if you break the rules, as you've found out.

It doesn't matter if these requirements are unrealistic -- they are what they are and you can't negotiate or reason with Premiere. It just doesn't care. If you don't play by its rules, it takes its ball and goes home.

My external is eSATA I just can't find a connector yet....I have been all over Cincinnati looking for one.

But I am wondering...why do you some renders come out just fine?

My internal is 7200rpm I assume that is fast enough.

I am currently moving the source files to one of my internal drives and about to render to my external. This is what I did when I thought I had it fixed.

Is it a bad practice to have source files on an external drive?

Yes, unless it's eSATA.

RAID1 ok? or do I need to be at RAID0?

But what I don't understand is why does the clip playback in my editor window just fine?

Not really related to the interface if it's only a single drive. But for multiple drives, 0 gives you speed but not safety, 1 gives you safety but not speed. A lot depends on how many disks are in the drive enclosure. I have 7 internal 1TB disks in RAID 5 with hot spare, for a total of 5TB capacity.Your edit window is a tiny low-res version that has much lighter data requirements.

But I should also make clear that the rules above are just general Premiere rules to help it work better overall and may not exactly be the cause of your problem.. Without knowing all your encoding settings, there's just no way to know. You could have a driver or codec problem or some other software is causing a conflict or using resources, or some oddball hardware somewhere or.... it could be a million things.

External drive? Firewire? RAID?

Check out DROBO.

It shows up as one big external drive. You can slot in several drives of different sizes. Start with two and add more later. If one goes down it tells you, you slot in a new drive (same size as last one or bigger), and it restores your setup automatically. They claim that with 4 drives in there you can lose two and you still don't lose your data! And it's cheap.

Unless someone tells me a good reason not to, I'm going to buy one. :)