PSA is just a cataloging application. You have NOT lost the images or
videos. You can just play them in Windows Media player if you need to
play them right away... or use Image Viewer for the images.
I'm not sure what that error is about, but a simply reinstall will fix
it if it has anything to do with PSA files.
I'm having the same problem. I have uninstalled and reinstalled several times and this doesn't fix the problem. It's getting quite frustrating.
Have you tried deleting the old catalog and folders before reinstalling?
I think that you should uninstall the application, delete the catalog folder MyCatalog.psa which resides at the location C:\Documents and Settings\All Users\Application Data\Adobe\Photoshop Album\Catalogs by default in XP. Afterwards, reinstalling the application should fix this issue.