You seem like you're pretty meticulous about keeping your system up to date, clean and defragged, which is always my first recommendation when someone says the program used to work but suddenly stopped.
I don't know which programs you're using to maintain your program, but here's what I recommend in my books.
Also go to Premiere Elements Edit/Preferences/Media Cache and clear the Media Cache.
You don't say if you're also keeping Quicktime up to date, but that too is important.
Strangely, there seem to be a lot of posts recently from people complaining about error messages, so it could be a faulty Windows update.
Meantime, try launching the program while holding down the left side Ctrl, Alt and Shift keys to clear any corrupt preferences. You can also go to C\DOCUMENTS AND SETTINGS\OWNER\APPLICATION DATA\ADOBE and rename the Premiere Elements folder, which will force Premiere Elements to recreate it next time you start the launch the program.
If that doesn't work, you might want to try uninstalling the program and then deleting the C\PROGRAM FILES\ADOBE\PREMIERE ELEMENTS 3.0 folder completely before you reinstall. (And, of course, also install Adobe's 3.02 patch.)
Beyond that, I'm not sure. But, once you're done with all of this, who knows. Microsoft might issue the patch that fixes whatever they did wrong!
I haven't been updating Quicktime, I'll attend to that straight away.
The fault seemed to coincide with an Adobe Flash Ver 10 update.
I also read somewhere in the posts that the style sheet could be corrupted.
Starting the program from a new user worked for some people, that seems to
indicate that using a new set of preferences could clear the fault.
Can you confirm that starting PE3 with all 3 keys held down, I thought I
read in the posts that it was only Control, Shift. Do you need to hold down
Alt as well?
I take it that deleting the Adobe folder as described will remove
preferences and style settings???
I'll check out your program maintenance suggestions.
Many thanks for the help and suggestions, I'll post the results when I know
how it all goes.
The problem was finally sorted last night. Doing the Ctrl, Shift etc didnt
solve the problem but renaming the Premiere Elements 3 folder to Premiere
Elements 3 OLD thus creating a new folder, did work. One of the project
files was then opened and it all came back to normal. I just had to point
the project to the old PRV file and away it went. Hopefully no further
problems but at least we'll know how to get around it.
Many thanks for all assistance.