Your title says DirectX 10.2 but your message says DirectX 11 - which?
What is the EXACT number of your ATI driver?
Did you update to 9.01?
Premiere Elements Updates http://www.adobe.com/support/downloads/product.jsp?product=101&platform=Windows
The ATI HD 4650 card spec. is directx 10.1, but my vista sp2 of some strange reason, running on directx 11
however, checking "dxdiag" I can't see any compatibility problems
Yes, I did updated to 9.01, but made no difference!