It's the UHD h264 mobile phone video that's causing it stutter.
Sadly, Elements doesn't have a "proxy" mode where it can build lower quality media, edit and export from the high quality media.
You'll end up having to transcode (which is what /u/Kichigai mentions.) Since it's elements, you don't have a compression package; you'll need to look at an FFMPEG tool, probably with a graphic interface (GUI) like Avanti FF http://avanti.arrozcru.org
My biggest suggestion...will be either to commit to Premiere Pro or try BlackMagic DaVinci Resolve (free) which has the ability to create proxy media.
Why would you use a virtual machine?
Free software conversions? Command line is FFMPEG, the backbone of VLC Player and Handbrake.
MTS files are very aggressive h264 MPEG Transport Streams with compressed audio - AC-3/Dolby Digital. It's the audio on DVDs.
You need to convert it to something that Hitfilm works with. The big question is if your system can play h264 in MP4/MOV (which are containers, h264 is the codec (compressor decompressor)).
Ideally you'd want to rewrap into MP4 and see how that system handles the h264 file.
The open source GUI on windows for FFMPEG is Avanti. You might also look at Adapter
I'm not sure if either rewraps. Rewrapping is ideal if the system can handle it.
If not, you're going to need to transcode, and I'd suggest (as a codec/container) ProRes/MOV. Be warned - a format like ProRes can run 1 Gb/min. It is a post production codec, meant to preserve quality and have good playback.
Using something like handbrake and making the MTS to an MP4 is going to add a generation of compression, something you want to avid.
There's all sorts of problems here. First, you need the latest update of premiere. Premiere 9.0.0 had audio problems.
Second, you're using screen recording software - most of them record in a variable frame rate - something editorial software have a problem with. I suggest you take a section and convert to something with a fixed frame rate that matches your footage.
Avanti is an open source GUI for FFMPEG that should be able to do it. I'll suggest a beefy 50 Mb/s h264 - or even better yet a dnxhd version above 70 Mb/s.
Last, do you have any codec packs installed? They cause problems with premiere - especially things like k-lite. Premiere gets confused about who should handle the decoding of codecs.
Last this line (sadly) is unimportant:
> but both in VideoPad Editor and VLC the audio is fine.
Each of these tools uses it's own engine to display video and audio. Premiere uses it's own too.