VideoStudio :: X2 Pro Memory Usage Kept Increasing?

I am still using VS X2. With my old Canon digital camera (avi files) I have been successful in editing and burning many avi projects of 2 hr duration. Since this camera broke down, I bought a Canon Vixia HF M31 HD video camera and recorded in XP+ resolution (1,440 x 1,080). The footage was then saved to the hard drive using the Canon provided Pixella Imagemixer 3 SE as mts files.

No problems were encountered in editing the footage with added captions and added background music (VSP file). Even when I rendered the VSP project of 30 min duration, it did not show any problems.

However, when during editing I played the project with or without added background music, after about 1 min VS X2 stopped working. sometimes an error message warned me "Out of Memory".

So, I added my system memory to the maximum 8 GB and VS X2 still stopped working. I monitored the memory usage with Windows Task Manager and saw that during the play back the memory usage kept going up and when it reached about 900 MB used, VS X2 stopped. So, when playing back the VSP file, I had to stop the playback when the memory used was around 850 MB in which case it dropped back to around 110 MB. Then I could continue playing and repeated the "stop" and "continue".

I edited the mts files as MPEG-2 files. Here is the properties of the edited file:

- File Format: NTSC HDMV
- Video Type: H.264 Video, Upper Field First
- Attributes: 24 bits, 1440x1080, 16:9
- Data rate: Variable (max 12000 kbps)
- audio Dolby digital 48,000 Hz, bit rate 256 kbps, layer: none

My questions:

1. Is the Upper field first correct?

2. Should I have edited the mts files as avi files in VS Project Properties?

3. If 2) above would not be possible, is there a way to convert all the mts files first to avi files using what software before editing with VS?