This is a problem and solution post. I had this problem and while i found untold others who had the same issue i struggled to find a solution, so will post the solution i discovered for this problem.
Went to upload video from my Sony HD Camera HDR-CX350 (flash drive), and the computer would find the camera as an external drive, but kept saying "Cannot find the media files to be imported" and there was no media showing as found on the import screen on PMB.
I wasn't sure if it was the software, so uninstalled and reinstalled. I upgraded to the latest version, no solution. It wasn't the software. have reinstalled the version that came with the camera.
In the end i copied all the files off the camera using windows explorer. Deleted the files off the camera using windows (apparently this is a no-no), you are meant to delete them off the camera using camera delete function otherwise you muck up the index file. This prompted the camera to repair the database, although you can prompt this on the camera thru the "Manage Media" section, then "Repair img.db.f." If this doesn't work, you need to reformat the drive.
This fixed the problem of being able to then record new footage to the camera and have it importable.
Now to solve the problem of being able to import the existing files that i copied to the computer, which are now in the wrong .mts format. I fixed this by using the export media function in PMB to export the files back to the camera, which then puts them back with a new file number. You can then import these as per normal into the format .m2ts with the file number as the date time the footage was taken.
I think this issue came about because i deleted a file off the camera that came with the camera, it was a sony demo file, which seemed to be taking up memory, but i couldn't seem to delete from the camera as it was protected. Because i did this it caused issues with the index file as mentioned above.
Hopefully this learning curve will help others to solve problems.