Yes, I understand that. I'm trying to first establish whether the problem is with PSE or your scanner. Go to your username>library>preferences and delete:
Adobe Photoshop Elements 10 paths
Adobe Photoshop Elements 10 settings
Repair permissions and try again. That user library is hidden in lion. To see it. click the Go menu in the Finder and hold down the option key. It will appear below the little house for your user account.
Also check the scanner manufacturer's website to see if there is a TWAIN driver for that model that you need to install.
I'm afraid you're probably out of luck with that one, since the only lion-compatible driver is the CUPS one. It would need to have a regular device-specific twain driver available to be compatible with PSE. My canon lide 200 works fine, but my n1240U totally doesn't.
Yes, you do need the canon utilities, but you need those to scan into OS X itself, too. You might try uninstalling and reinstalling all that, to see if it helps PSE 10 to see it, but it may still not work properly. If you create another user account and log in there, does it work in PSE 10 now?