BAD problem - photoshop getting worse

Question

i make GUIs for software synthesizers and it is CRITICAL that i have pixel-per-pixel performance.
i have used photoshop for over a decade. granted, i am not erudite on colour or display settings, still, this blows me:
for about the last year, i will occasionally open a project in photoshop elements 3, which i am using now, and discover that it blurs pixels, especially on transparent layers with shades of gray (which is what i generally work in). this is absolutely not tolerable
then, other times, i will open a project and it will look fine.
now, all of a sudden, it's doing it really really badly.
i took these screenshots with ms PAINT.
http://www.xoxos.net/temp/psbug/bug.bmp
in this bmp, correct rendering is juxtaposed with incorrect rendering. there is a zoom of two black pixels kitty corner. this should be black and white squares. you can see that it interpolates gray at some level.
and, as i said, i don't know why. it just started doing this all of a sudden. perhaps some other program changed my display settings? i'm using windows xp, i've been using this edition of pse 3 for ooh four years now???
i took those screenshots a few days ago.
today, i took this:
http://www.xoxos.net/temp/psbug/good.bmp
this is what it looks like on the screen and in paint.
http://www.xoxos.net/temp/psbug/bad.bmp
this is what it looks like in adobe photoshop elements 3.0 today. maybe if i restart my computer it will look differently.
that is disasterous.
again, i use this software professionally, and when designing GUIS for software synthesizers it is utterly critical that each pixel is rendered correctly, because many of the elements on guis are 1 pixel width lines. i hope everyone woerking in graphics apps appreciates that we don't want antialiasing, users want wysiwyg.
please provide some insight into what is occuring.. whether my colour settings have fritzed, if i should reinstall the software, if my monitor is suddenly allergic to photoshop, et c.
this cannot continue like this. i will try to attach the images if this forum allows me. *edit* it's not letting me upload bmps, even though they are under 2mb :/
thank you

Answer 1

i uninstalled and reinstalled pse3.0 and the error still occurs.
note that every other image viewer i have (windows image viewer, paint) displays the image correctly.
after reinstalling photoshop elements, my preferences were still present, ie. recently edited images, so now i'll try it again with nuking my registry while it's uninstalled.
NO format should use anything BUT wysiwyg :/
*edit* (edit #1.. edit #2 follows..)  this may help someone diagnose the error:
in the top bar of the image window it displays:
myimage.psd @ 100% (MOD 1 2 3,      RGB/8)
i presume this means i am stuck in 8 bit colour!
i have tried edit > preferences and the available colour preferences only make the image worse.
what mode should i be in to be in 32 bit colour when i edit images? i don't know how these settings got changed (and am only presuming that this is the issue)
*edit #2*
i created a new image and selected 'rgb colour' as the option, which displays painted pixels correctly. it does not display images fromthe clipboard correctly, so i am still in the dark about what the error is.
i don't really care about image settings. i want each pixel to display the colour it is and not the colour of the pixels next to it. something is wrong.
*edit #3*
if i copy the image to a new file, select the green, and then use the pencil tool to draw 1 pixel blocks on the black background, it comes out the same cacky antialiased crap, dark green in some places instead of the same green shade.
if i do this in PAINT it works properly.
PLEASE do not tell me that i have to use paint, and that paint is better than photoshop. i want it to work the way it used to
so obviously somewhere that i can't seem to access, my adobe display palette is screwed up. please tell me how do i set it back.
i am quite confident with navigating and making changes to the registry if you can identify registry settings that are suspect 
Adobe Photoshop Elements Version: 3.0 (3.0x199)
Operating System: Windows XP
Version: 5.1 Service Pack 2
System architecture: Intel CPU Family:6, Model:14, Stepping:8 with MMX, SSE Integer, SSE FP
Built-in memory: 1526 MB
Free memory: 750 MB
Memory available to Photoshop: 1393 MB
Memory used by Photoshop: 50 %
Image cache levels: 4
Use image cache for histograms: No
Serial number: 10574537504496914327
Application folder: C:\Program Files\Adobe\Photoshop Elements 3.0\
Temporary file path: C:\DOCUME~1\rurik\LOCALS~1\Temp\
Photoshop scratch has async I/O enabled
Scratch volume(s):
  Startup, 111.8G, 25.2G free
Primary Plug-ins folder: C:\Program Files\Adobe\Photoshop Elements 3.0\Plug-Ins\
Additional Plug-ins folder: not set
Installed plug-ins:
   3D Transform 8.0.1 (8.0x125)
   ADM 2.84pe69a 02.06.17-00:03:36h
   ASDStrm 1.02x7 02.02.15-01:45:06h
   Accented Edges 8.0
   Acrobat TouchUp Image 8.0.1 (8.0x125)
   Angled Strokes 8.0
   Auto Divide 3.0 (3.0x199)
   Average 8.0.1 (8.0x125)
   BMP 8.0.1 (8.0x125)
   Bas Relief 8.0
   Camera Raw 2.3
   Chalk & Charcoal 8.0
   Charcoal 8.0
   Chrome 8.0
   Clouds 8.0.1 (8.0x125)
   Color Halftone 8.0.1 (8.0x125)
   Color Variations 8.0.1 (8.0x125)
   Colored Pencil 8.0
   CompuServe GIF 8.0.1 (8.0x125)
   Conditional Mode Change 8.0.1 (8.0x125)
   Conté Crayon 8.0
   Craquelure 8.0
   Crop and Straighten Photos Filter 8.0.1 (8.0x125)
   Crosshatch 8.0
   Crystallize 8.0.1 (8.0x125)
   Cutout 8.0
   Dark Strokes 8.0
   De-Interlace 8.0.1 (8.0x125)
   Difference Clouds 8.0.1 (8.0x125)
   Diffuse Glow 8.0
   Displace 8.0.1 (8.0x125)
   Dry Brush 8.0
   Extrude 8.0.1 (8.0x125)
   FastCore Routines 8.0.1 (8.0x125)
   Fibers 8.0.1 (8.0x125)
   Film Grain 8.0
   Filmstrip 8.0.1 (8.0x125)
   Filter Gallery 8.0
   Frame From Video 6.0
   Fresco 8.0
   Generic EPS 8.0
   Generic PDF 8.0.1 (8.0x125)
   Glass 8.0
   Glowing Edges 8.0
   Grain 8.0
   Graphic Pen 8.0
   Halftone Pattern 8.0
   Ink Outlines 8.0
   JPEG 2000 1.6
   Lens Flare 8.0.1 (8.0x125)
   Lighting Effects 8.0.1 (8.0x125)
   Liquify 7.0
   MMXCore Routines 8.0.1 (8.0x125)
   Mezzotint 8.0.1 (8.0x125)
   Mosaic Tiles 8.0
   Multi-Page PDF to PSD 8.0.1 (8.0x125)
   Multiprocessor Support 8.0.1 (8.0x125)
   NTSC Colors 8.0.1 (8.0x125)
   Neon Glow 8.0
   Note Paper 8.0
   Ocean Ripple 8.0
   OnEdge 1, 0, 0, 1
   PCX 8.0.1 (8.0x125)
   PDF Image 8.0.1 (8.0x125)
   PNG 8.0.1 (8.0x125)
   PNG Icons 1.21x7 2001.12.14-1602h.21s
   Paint Daubs 8.0
   Palette Knife 8.0
   Patchwork 8.0
   Photo CD 8.0.1 (8.0x125)
   Photocopy 8.0
   Photomerge 8.0.1 (8.0x125)
   PhotomergeCylmap 8.0.1 (8.0x125)
   PhotomergeRender 8.0.1 (8.0x125)
   PhotomergeUI 8.0.1 (8.0x125)
   Picture Package Filter 8.0.1 (8.0x125)
   Pinch 8.0.1 (8.0x125)
   Pixar 8.0.1 (8.0x125)
   Plaster 8.0
   Plastic Wrap 8.0
   Pointillize 8.0.1 (8.0x125)
   Polar Coordinates 8.0.1 (8.0x125)
   Poster Edges 8.0
   Radial Blur 8.0.1 (8.0x125)
   Read Watermark 1.70.19
   Reticulation 8.0
   RetroDots NO VERSION
   Ripple 8.0.1 (8.0x125)
   Rough Pastels 8.0
   Save for Web 3.0
   Shear 8.0.1 (8.0x125)
   Sinedots II NO VERSION
   Sinedots NO VERSION
   Smart Blur 8.0.1 (8.0x125)
   Smudge Stick 8.0
   Solarize 8.0.1 (8.0x125)
   Spatter 8.0
   Spherize 8.0.1 (8.0x125)
   Sponge 8.0
   Sprayed Strokes 8.0
   Stained Glass 8.0
   Stamp 8.0
   Straighten Image 8.0.1 (8.0x125)
   Straighten and Crop Image 8.0.1 (8.0x125)
   Sumi-e 8.0
   Targa 8.0.1 (8.0x125)
   Texture Fill 8.0.1 (8.0x125)
   Texturizer 8.0
   Tiles 8.0.1 (8.0x125)
   Torn Edges 8.0
   Twain Acquire 8.0.1 (8.0x125)
   Twain Select 8.0.1 (8.0x125)
   Twirl 8.0.1 (8.0x125)
   Underpainting 8.0
   WIA Support 8.0.1 (8.0x125)
   Water Paper 8.0
   Watercolor 8.0
   Wave 8.0.1 (8.0x125)
   Wind 8.0.1 (8.0x125)
   Windows Metafile NO VERSION
   Wireless Bitmap 8.0.1 (8.0x125)
   ZigZag 8.0.1 (8.0x125)
Installed TWAIN devices: NONE
*edit 987*
okay.. apparently my monitor (it's a laptop with the same resolution pixels as every laptop i've seen except those tiny notebooks manufactured in the last 10 years) is 96 dpi
whereas photoshop is working at 72 dpi??
so.. i created a new image at 96 dpi, copied and pasted the crappy image..
..and i'm getting the bahaviour i've bene getting eith other files in the past few months:
it draws the pixels correctly sometimes, then if you drag the layer, or resize the image, or change just about anything where it's forced to redraw the screen, it will muck it up 50% of the time...
look: it's a simple thing: draw the pixels for my hardware. how do i make photoshop do this again?? *nonplussed*
*edit 19835461905606*
okay... so i've experimented with creating new files with different dpis to see what it's going to do.. i tried 96.. this looked okay half of the time.. if i dragged the image it screwed up. if anythnig changed it screwed up, like it's moireing the image..
so i thought if i tried experimenting i could see if my system will respond to some mysterious correct value, as 72 or 96 don't cut it.
so.. now, whenever i select > new image,
it defaults to 72.009 dpi!!!!!
wtf is that???!!!!!
obviously, something has screwed up my dpi settings, ads it's clearly a moire effect... sometimes bands of the image (vertical horizontal) are worse than other parts, eg. in the 'bad' bmp, the botton half is screwed up and the top half isn't.