For some reason, as soon as Premiere Elements is updated to interface with YouTube, YouTube changes the game.
You don't say which version of the software you're using, so it's hard to give you specific instructions.
But I'd recommend you just create your video manually using Publish & Share/Computer/AVCHD with the YouTube HD preset and then just manually upload this MP4 using the interface on the YouTube site.
Your results should look terrific!
What do the error message say?
What is the duration of the Timeline content that you are trying to upload to YouTube?
What version of Premiere Elements are you using and on what computer operating system is it running?