Adobe Pat 206
You cannot create a Premiere Elements (any version) DVD Template from scratch using Photoshop Elements (any version). To do that you need Photoshop CS or higher. The reason for "higher" is that earlier Photoshop versions do not support Layers Groups within the Layer Groups.
But, providing you find a version of Photoshop Elements on a given computer operating system that will open the Photoshop Layer Groups in its key structure (.psd file), you can use Photoshop Elements to edit (not create from scratch) the .psd file for the main and scene menus of a given existing Adobe theme. I am careful on my language here since there have been recent difficulties getting Photoshop Elements to do this job which it once did without issue.
The process is easy enough, but very detail dependant, with strict requirements for names files as well as Layer Groups, sublayers groups, and layers in the .psd file. To give you an idea of what is involved, please check out two articles I have written related to Premiere Elements DVD Template creation and customization.
Not placing the new menu in the correct directory and any error in spelling and such are just some of the ingredients for failure in this type of project.
Unless you want to add extra buttons to a menu, it might be easier for you to explore customization opportunties in the Movie Menu section of the program. See Tools/Movie Menus. The Movie Menus customization area should look like this
Note that the Adjustments...Menu Background shows Video or Stills among other things.
If you have questions on anything that I have written, please ask me here in your thread.
You can also check out the Adobe documentation on this type of topic.
I agree with ATR's directions.
Now, one alternative opportunity might be some of the custom Menu Sets, available at Muvipix.com. There are quite a few there, with some different layouts (plus design elements), that might help you customize things, per ATR's directions.
With PsE, and an existing Menu Set as a "template," customization is quite easy, so long as one follows the naming conventions 100%. ATR outlines those.
The reason that I mentioned the Muvipix Menu Sets, is that some are quite different in their structure, and one of those might be a great place to start.
When you refer to "quite different in their structure", are you referring to the original start off design (number of buttons) or something else? I am assuming that you are referring to start off design rather than the physical build of the .psd file.
Deviation from the basic Adobe restrictions/requirements for .psd structure (Layer Sets/Sublayer Sets/Layers et al) and nomenclature for files and folders can be hazardous.
Needs confirmation, but my recollection is that Steve Grisetti is the one who creates those menus over at his forum, and he has written that he customizes existing templates to do that. So that should be an encouragement for Adobe Pat 206 to follow up on the Movie Menu customization of existing templates via the Movie Menu sector of the project or at the .psd level with Photoshop Elements, more reliably Photoshop CS or higher.
But these days, being able to predict whether or not a given version of Photoshop Elements is going to be able to open those DVD Templates .psd layer groups in a given day is tricky business. It is a longer story.