What are you "in" when you click on an NEF to open in Elements 8: Organizer, the Elements File/Open menu? The progress-bar behavior you describe sounds like what I see going from Lightroom into Photoshop CS4 where all the RAW adjustments have been done in Lightroom, itself, and I'm doing some Photoshopping to the result of the RAW conversion. Since all the ACR adjustments are done in LR, itself, all LR does is pass these adjustments invisibly to Photoshop and Photoshop calls on ACR to silently render the file into the Photoshop workspace with only a progress bar as evidence something is occurring.
If you are opening the NEF from Organizer or the Elements Photoeditor, itself, then it doesn't quite make sense you wouldn't be able to see ACR, but perhaps there is some "simple" or "express" mode you have set and it doesn't show complicated things like ACR. Check to see if there is a preference in Elements that controls this. You might find more info in an Elements forum if there is one.
I only have PSE7 and PSE6 so cannot test theories or search preferences, myself.
You also might try renaming the camera raw.8bi file to camera raw.8bx, temporarily, to see if you get an error. That would confirm if the ACR you give the location for is what is giving the progress bar or if something else has inserted itself in the process and bypassing ACR.
With Elements 7 I think there are two different places that the Camera RAW can reside, one particular to the user and one not, so maybe there is more than one Camera RAW.8bi as well and you might have to search your hard drive for it to make sure you've renamed them all for the experiment.
1) Location of Camera Raw Plugin
With PSE8, the file Camera Raw.8bi has been moved from
C:\Program Files\Adobe\Photoshop Elements 8.0\Plug-Ins\File Formats
C:\Program Files\Common Files\Adobe\Plug-Ins\Elements 8\File Formats
This is not documented in the ACR 5.5 Installation Guide yet, but PSE 8 comes with ACR 5.5 anyway.
2) ACR not loading, but PSE Editor
This sounds to me like the Screen Resolution Problem described here.
The problem was resolved by simply updating the video card device drivers.
Thanks to tech.support at onOne Software who suggested it might be the case.
This was the driver I had was NVIDIA GeForce 9800 GT Driver Date 02/08/2008 Driver version 18.104.22.16883
This is the driver I have now is NVIDIA GeForce 9800 GT Driver Date 27/09/2009Driver version 22.214.171.12407