After selecting your size and clicking OK the next dialog should offer this choice.
Unfortunately PSE crashes before it gets to this window.
It appears that this is a permissions issue.
The problem occurs in a user account.
If I run the app in an admin account it works.
Now I'm working on fixing the permissions.
Went to the library ( I think it would be called the root level, but certainly not at the user level)
library>Application Support>Adobe>Photoshop Elements>9.0>Locale>en_US
Changed permission to allow the specific user account to read and write, need to make sure the permissions are changed for the folder contents as well as the folder.
Application now works as expected.
Adobe technical support told me that a new user account would solve the problem. Accordingly, after I had changed permissions as noted in my earlier post, I created a new user account and PSE did work correctly.
I then went back to my standard user account and removed the permission that I had added, and which had previously removed the problem. Launched PSE and it worked correctly.
I mention this because Adobe Technical Support suggested that I create a new user account and then move all my data to the new account and make it my standard account. While this is a clean solution its a lot of work.
If anyone else runs into this problem it might be worth tweaking the permissions as I did before going to a wholesale movement of data.
I am glad I found this thread. I ran into this problem too with calendars and Content in the editor. I run workshops for kids, have a student account setup. The student account would crash when we went to the Create Section and did not show any of the content in the editor. I knew this had to be a permission problem since I could run the program fine in admin mode. When I did a "quick chat" with Adobe they could not help me and the phone line was a 45 minute wait! Yikes!! So, I will try this suggestion and hopefully it will work for me.
So, it seems that maybe after I change the permissions I should create new user accounts?