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Yep, it happened to me too and I just wrote it off to mysterious weirdness. Turns out, it's related to an unflushed cache from Photoshop Elements 3 that version 4 can't handle. The solution involves erasing the thumbnail cache, recovering the Catalog, and then updating the thumbnails.
Here's how:
1. Navigate to:
Documents and Settings\All Users\Application Data\Adobe\Catalog Folders\ [ your catalog name ] \
2. Delete all tn. [ # ] .cache files.
3. To recover the catalog, start Photoshop Elements 4.0.
4. Press and hold Ctrl and click an Organizer Option. Continue holding Ctrl until the catalog recovery prompt appears.
5. Click OK.
Got some tips of your own? Email me.
