It's going to be tough to find support for a 7 year old version of the program on a 10 year old operating system.
But one thing worth checking -- Do you have an nVidia graphics card?
I have ATI Radeon 3000 Graphics built into the mother board.
Have you updated the graphics driver from the AMD web site?
Yes. The problem continues unchanged.
As I've said, it's a very old piece of software on a very old operating. I'm not sure what else to recommend.
Try System Restore.
If that doesn't work, as a long shot, try checking for malware.
I found it!
Open Premiere Elements
Go to Task Manager
Right click on Premiere Elements in Task Manager
This will open Premiere Elements full screen. Go to Windows tab and Restore Workspace. Everything is back to normal.
Not sure what caused the problem but more digging around found references to Windows 7 doing this randomly to other programs.