Try resetting editor preferences.Follow these steps.
Go to your username>library>preferences and delete:
Adobe Photoshop Elements 10 paths
Adobe Photoshop Elements 10 settings
and any lockfiles with the same names.
That library is hidden in 10.7 and 10.8. To see it, in the Finder, click the Go menu and hold down the Option key.
I thinkg you need to Re-create the MediaDatabase.db3 file. Go to location
Rename the file MediaDatabase.db3 to MediaDatabase1.old.
Relaunch Photoshop Elements Editor. A "Building Contents and Effects" progress bar appears, as your MediaDatabase.db3 file is re-created. Wait for this process to finish; it can take several minutes.
Note that the library in 99jon's post is the library at the top level of your hard drive. You have three libraries in OS X: system>library (never go there), your username>library, and hard drive>library. You want the latter, which isn't exactly hidden, but is hard to find in 10.8. You can most easily make it visible by going to the finder preferences>sidebar and turning on hard disks:
Then when you click the name of your hard drive on the left side of a finder window, that library will be at the top level of results.