The kbase doc says in great big type:

Update to Adobe Camera Raw 6.6 or later (Bridge CS5 or 5.1 Only)

You can only install 6.6 in PSE 9 by a rather tedious manual process. Please go back and look at the suggestions for PSE instead.

You are supposed to change the text within the "location" tag. A tag is the text that appears between the angle brakets ("<" and ">"). In the picture on the screen we can see that there is a location tag ("<location>") and then a file path ("/Users/[User Name]/Pictures") followed by an end tag ("</location>", the "/" denotes the ending of a tag). So, in this example, the file is currently setup to send files to the Pictures folder within the user account, /Users/[User Name]/Pictures. If you want to send your files to the desktop, you would replace the path with this: /Users/[User Name]/Desktop.

If the folder currently listed in APDPreferences.xml is the one you want to use, why would you need to change anything? Why would you be clicking the "Choose" button in the Photo Downloader? Just let the Downloader do it's job.

Wait, you have Lightroom and Photoshop Elements, but you are opting to use the Elements Organizer? Most people who have LR and PSE use LR for the lion's share of the work and use PSE Editor as the external editor for the more detailed touch-ups (ignoring the Organizer altogether). I would certainly not recommend using both applications to manage your files, the two catalogs do not sync, so changes made in one will just cause problems in the other.

Next, exact spelling is required when typing in the file path. If you add or subtract an "s" from anywhere, you are going to be dealing with two different paths. You probably don't want to place any of your images in any folder with "lrdata" as part of the name.

Modifying the APDPreferences.xml file is a work around. When in the Photodownloader, if you click the Choose button and then select a folder, this information gets saved to the location tag of this file. My modifying this file by hand, you are preempting the Choose button, you are entering the information a different way. That way, once you startup the Photodownloader you don't have to click the Choose button, because that will continue to freeze. These steps do not stop the freeze from happening.

Additionally, you have skipped solution number 2 from the knowledgebase document, which is much easier to use than solution number 3.

Ultimately though, I would definitely use Lightroom for importing all of your images from your camera.