I don't know what I have done wrong, but there is something not working right.
And we don't either...you've not stated what OS platform nor version of Photoshop you are running so there's really no way we can help. Get back to us and we'll help.
sorry...OS 10.5.8 and photoshop elements 8
Well, that complicates things considerably...you'll need to go to the Camera Raw Product Page and carefully follow the installation instructions as closely as possible. Elements is a different animal than Photoshop so I can't tell you EXACTLY what to do...also, just to be clear you have an A500 Sony" The should be supported in the most recent Camera Raw update.
I already did that, that is why I am frustrated. Camera Raw works. I can edit and save. I simply cannot see my thumbnails, and am unable to save anything in any other format than .dng