Hi sarsaxen - you beat me to it!
It seems that I had failed to set the additional External Editor to the right place in LR. Rather than shortcutting it to the app itself, I should have directed it to /Applications/Adobe Photoshop Elements 14/Support Files. This has sorted it.
BUT when I try to save an edited photo back to LR, it goes to the original folder on the desktop from where I had imported it into LR and not into LR itself. Hmm hope that makes sense?
So....I am stuck now trying to get an edited photo back to LR?
This is by designed and it is supposed to behave in that manner only.
The image will go to its original location after the edits rather then coming back to Lightroom.
If you want to raise a request for the same please go to the below link: