You said it was a 'Canon digital camera', which could equally describe a still camera,hence my need to clarify exactly what camera we are talking about. (FWIW, my canon still camera takes very good video with sound, but not in DV AVI format.)
I asked if there was anything unusual because it is amazing how often problem turn out to be due to an equipment/software combination that seems perfectly reasonable to the person with the problem so they don't think it is necessary to mention it until cajoled.
You are working in NTSC, by the look of your frame size and the Canon Optura 50 is a perfectly normal DV video camera. You have a new computer with all the right interfaces, and Premiere. So it should all just work - as my recent new computer did - first time.
But it doesn't, so something is wrong somewhere.
I assume that the recorded video plays OK on a TV when directly connected.
I also assume that you have chosen a project preset in Premiere that matches your source material (probably DV NTSC 48k).
If you are getting bad video pictures with all the right settings, and if camera control works OK (ie the FireWire is OK), then I start to suspect you might have a camera problem.
Have you a way to connect another DV camera and see if you can capture OK from that? Or to connect your camera to a different capture computer?
If another camera exhibits the same issues, or if footage is OK on a different machine, another possible line of enquiry would be about CODECs installed on your system. There have been reports of some DivX CODECs interfering with Premiere, but I do not have the details to hand.
Yours is a very unusual-sounding problem, so it may take a little while to get to the bottom of it.