Adobe loves to force your hand at updating the software. when new camera's come out adobe is the first to make sure you have the latest software. Ie. when the d700 came out, you had to have cs4 to read the raw because ACR 4.x wasn't compatable with CS3 even though CS3 was still a valid release.
PSE supports the latest ACR:
Install Camera Raw 5.6 for Photoshop Elements 8 and 7 on Windows
1. Close Photoshop Elements 7.
2. Download Camera Raw 5.6 from
Adobe - Photoshop Elements : For Windows : Camera Raw 5.6 update.
3. Extract the Camera Raw.8bi file from the ZIP file you downloaded. (Extract only the Camera Raw.8bi file that is at the top level of the ZIP file. Do not extract the Camera Raw.8bi file from the Win64 folder that is inside the ZIP file. This folder contains the 64-bit edition of the Camera Raw plug-in, which is compatible only with the 64-bit edition of Photoshop CS4.)
Note: ZIP files are compressed files which contain other files. On Windows Vista, you can extract Camera Raw.8bi by right-clicking on the file you downloaded, choosing Extract All, clicking Extract, and then opening the newly-created Camera_Raw_5_6 folder. On Windows XP, you can extract Camera Raw.8bi by right-clicking on the file that you downloaded, choosing Open With > Compressed (Zipped) Folders, and then dragging Camera Raw.8bi to your Desktop.
For Photoshop Elements 7
* If you are using a 32-bit edition of Windows, then move Camera Raw.8bi into C:\Program Files\Adobe\Photoshop Elements 7.0\Plug-Ins\File Formats. If you are prompted to overwrite the existing plug-in file, then click Yes or Overwrite.
* If you are using a 64-bit edition of Windows, then move Camera Raw.8bi into C:\Program Files (x86)\Adobe\Photoshop Elements 7.0\Plug-Ins\File Formats. If you are prompted to overwrite the existing plug-in file, then click Yes or Overwrite.
1. To install Camera Profiles, extract the CameraProfiles.exe file from the ZIP file that you downloaded. Next, double-click on CameraProfiles.exe and then follow the on-screen instructions.