Something to try:
In the Character Dialog, go to the field that by default says "Metrics" and select "Optical" instead. Then you can highlight all text, or between individual characters, and use the field to the right of "Optical" to adjust letter spacing.
I hope this helps.
Is photoshop CS ME the version you are using or a later version of photoshop such as cs5?
What operating system are you using?
I bought t here in ME from an adobe partner so i asume its ME Edition, i use OSX Mountain Lion
its CS6 Extended
Did you find any solution Ammar?
I have CS5 Middle eastern version and I am facing the same problem.
Everything is fine when typing on another program like notepad or MS word, but in photoshop letters are reversed,
in windows -> Character: I chose Adobe Arabic
Windows -> Paragraph is set to right align text and justification is set to arabic, eventhough arabic letter are typed backward and are not connected.
I faced the same problem, the solution is: GO to; Edit / Preferences / Type / Choose Text Engine Options / Middle Eastern and South Asian.