You need Adobe Camera Raw, which comes with CS2 and CS3. I don't think Elements (purchased alone) comes with Camera Raw. If it did, then when you open the files they would automatically open in Camera Raw, which is what they do in CS2/CS3.
PS Elements 4.0 (which is what I have) automatically opens them in RAW format. PS opens the browser, then when you right click on the pic you want, go to standard or quick editor. It will open that, then another window allowing you to edit the RAW image, when done it takes you to the normal quick or standard edit window.
I'm not sure about Elements but PS CS and later versions come with RAW editors installed. I have CS2 and it had plug-in installed as soon as I finished installing the software, I did install upgrades for it but that is another story.
PS> Also, Canon shooters can use latest Zoom Browser for opening and editing RAW files if memory didn;t fail me..
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