Whenever you're loading a video and are having trouble, here's a good thing to try:
1) Create a new project in particleIllusion.
2) Add a simple emitter, no background movie or image
3) Render an output AVI using your preferred codec
4) Create a new project in particleIllusion
5) Load the AVI you created in step 3 into a layer
6) If it doesn't work, repeat the whole process using a different codec.
This will let you know if there are any codecs that particleIllusion "doesn't like".