Working with AVI files in Premiere CS3

Hello
I imported a 2 minute video file (size 212.4MB) in its original format - a .AVI.
I've barely made any edits at all bar sticking a GFX card at the top and tail.
I can't render it and am unable to export the file via media encoder as an MPEG2. It takes ages and then tries for a second pass which would take days!
1. Should I compress the file before importing - if so how?
2. Should I change my settings!
My settings are:
General 720 x 576
Display Format 25fps
Any help appreciated for someone new to tapeless and CS3!

Ann thanks so much and apologies for delay in thanks - was away!!
Found the ARC software that came with the camera which converted it. Oh, the joys of working with different cameras every day...