I haven't found a similar situation on these boards so I wanted to share with you how I fixed it. Maybe there is another way but this was the first thing I tried and it worked.
I have been busy moving all my files from my old WinXP computer to my new Win7. One of my external hard drives houses all the video files for my current movie project which has many different project files for all the different scenes. I also have a copy on another hard drive as well as on DVD's. I wanted to open all the .prel files because the drive letter changed of the external drive on the new computer. I know I could have changed the letter of the drive but I found a couple changes I wanted to make in all of the files anyway.
When I opened the file it of course asked to find the video files. I opened and saved many project files without a problem. They have a mixture of vob files, .avi files, and .mov files. On the XP computer PE7 handeled them just fine. When I opened one of my files and browsed to get the vob file, I think it said it could not be opened because it couldn't read the format even though I just opened other project files with those video file types. I moved the external hard drive back to my XP computer and opened the project files. No problems reading the video files. Went back to the new computer and it still couldn't open them.
I said just to skip it for now. Then it asked to find a .mov file. When I browsed for that one it said, again I think, something to the effect that it doesn't have the same audio and video format...I'm assuming to what it THOUGHT it should have been.
I looked online a bit and one suggestion was to see if it can be added to a new project file. I added the .vob file to a new project file on the new computer and PE7 opened the .vob without a problem. Then I added the .mov file and no problem. I went back to the original project file, browsed for those files again and it opened without a problem. Like it just needed to be recognized somehow.