This is odd, indeed. PSD's are the native format of Photoshop, and Photoshop Elements.
Now, PSD's can be of a type, that would keep them from loading into PrE, such as being in the CMYK Color Mode. However, if you have found PSD's in the PrE Library content, and those will not load, something is very wrong.
Can you Open one of those problem PSD's, in PS, or PSE, and tell us the full details, like the Color Mode?
It's RGB color. When it loaded into Photoshop Elements, I first got the message that the file had been created for viewing on a TV and would load compressed (slightly vertically narrow) and recommended viewing it on a video monitor. Other than that, it loaded fine. Do you need anything other info about the file?
OK, that message is telling you that the PSD has non-square pixels, so the display will differ slightly.
There is no real CODEC involved with PSD's, and RGB is what you want.
If PrE cannot Import such a PSD, then there is something wrong with your installation of PrE.
That's indeed odd. My original installation was with the downloaded trial edition. Since the Instantmovies weren't working well, I uninstalled and reinstalled. Same problem, so I uninstalled and installed again from the disk set I bought. And there's been no improvement. So the install packages are the same (as Adobe tech support told me) and I encountered no problems doing the installations.
As you may recall from your other responses to a couple of other minor issues involving Premiere Elements, I'm using a Toshiba Satellite, i3 Intel processor, 4 gigs of RAM, Windows 7 Home Premium, 64 bit.