Thanks for the suggestion.
I omitted to say that I'm using PSE11 on a Mac, rather than a PC. I looked for the equivalent file path on my Mac (Library\Application Support\Adobe\Photoshop Elements\11.0) and renamed that temporarily, but when I launched Elements after that it just crashed. Twice. So I have reset the folder name back to its original name (no longer crashes) but still have the original problem.
I think I may have resolved the problem by renaming a file (which had possibly got corrupted?).
Here's what I did:
I renamed file "MediaDatabase.db3" to "OLD MediaDatabase.db3" in folder Library\Application Support\Adobe\Photoshop Elements\11.0\Locale\En_US. Restarted PSE11 and clicked on Create, using the default first item (A Spot of Teal) and - after a slight pause whilst the catalog was rebuilt - it worked! (previously it hadn't). Tested with other themes and they were all OK too.
NB: the above file path is on an Apple Mac running OS X Mountain Lion - it may vary between versions of OS X and will certainly be different on a Windows PC (see Surendra's post, above, for a suggestion of where to start).