Are you getting any message about MPEG2 Activation?
What are you trying to do....burn to folder Folder (4.7 GB) or burn to disc? There seems to be a conflict between your thread title "create disk folder" and body of reply "going to Share/Burn Disc".
I have Premiere Elements 4 on Windows 7 64 bit, and it has been running OK for Share/Disc/DVD disc with the standard or widescreen presets.
Are you having problems with the burn to folder as well as burn to disc? If you have not tried burn to folder, please try that and let us know how that works.
Also, please tell us what the burn dialog shows in its Quality area for Space Required and Bitrate (with check mark next to Fit Contents to Available Space.
What is your project preset?
What are the properties of your source media?
Do you have menu markers on the Timeline?