Just as a follow up:
I did reinstall CS4. My problems regarding Media Encoder linger a little. It does start and encode the project now- so that was the big issue at hand. NOW the next problem is it takes 3x the amount of time to encode a 10min HDV project to h264 than Premiere CS3 with the old internal media encoder. I ran a side by side comparison.
My performance with CS4 is still way below average.
I don’t understand these CS4 issues. I spent $800 for a few extra features and my life in the editing room has gone to hell. Flawless, smooth, streamlined editing with CS3 on the same machine, same drivers and exact same HDV footage. Upgrade to CS4 as described above and its like I went back in time 3 years.