I think I figured it out.. I downloaded the files direct from the SD card using a card reader to my hard drive. I then opened the VLC (newest version) and was able to play the .MTS files after I retrieved them from the hard drive.
I was thinking of upgrading but now I might wait for the iLife `10 version, any idea or rumor of when that might come out.. I know Apple is hush hush on all of that..
Thanks for the quick response