That is indeed strange behavior. Also, it looks like you had the correct path the first time.
I haven't seen behavior like this before, but the first thing that comes to mind is that the settings files may have become corrupted. Let's take a look at resetting them and see if that corrects the behavior.
1. Close Elements Organizer
2. Go to:
--Windows XP: C:\Documents and Settings\[User Name]\Application Data\Adobe\Elements Organizer
--Win Vista/7: C:\Users\[User Name]\AppData\Roaming\Adobe\Elements Organizer
3. Rename the folder "8.0" to "8.0old"
4. Retry Elements Organizer
If this doesn't work, delete the new 8.0 folder and rename 8.0old back to 8.0.
Thanks for the screen shot. The main reason I wanted to see this was to verify that your catalog was for this version. Which it is. It's hard to tell from the screen shot, but it looks like the catalog file has been set to "hidden". The icon looks semi-transparent. While you can turn on settings in Windows Explorer to view "hidden" files, it would still be hidden from applications. Which wouldn't prevent it from being used.
So try this:
1. Right-click on "catalog.pse8db" and choose Properties.
2. Verify whether the "Hidden" option is checked. If it is, uncheck it and click OK.
3. Retry checking File>Catalog in Photoshop Elements.
That was it. It's now shown as the current Catalog, and I can use the Repair etc buttons. Thanks so much for staying with me on this!
Remember that this all started with PSE 10 not being able to convert this backup, and suggesting that it be restored in PSE 8 and then a new backup be made. So that is what I am going to do next. I hope I won't be back regarding this task, but believe if I have a problem, I will definitely be seeking your help again.
I have now idea how the file got designated Hidden. I don't even recall looking at the properties screen.