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Nancy, I use Elements and Album also, although I'll admit that I only just got Album.
But, I'll try to help you. I am a little confused with your question... where are you trying to save your scrapping? If you use Elements to save, it automatically saves in psd format. If you are completely done with the file and want to save it as a jpeg, I think you have to use that choice specifically in "save as" in Elements.
I'm also using Album to catalog the CDs I've purchased and downloads with backgrounds and templates. These are all in psd format and Album is reading them with no problems. By doing this, I can browse all of the various elements, backgrounds, templates etc that I have at my disposal, decide what I'd like to use and Album tells me exactly which CD to pull.
Don't know if that helps, if you need more information you can PM me and I'll be glad to see what I can do.
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