Can't add new layer

This has to be somthing simple and stupid.  Using Elements 8, here is what I'm doing:
1) Using main menu, click "File / Open"
2) Select a Canon RAW file (.CR2)
3) File opens in Camera Raw
4) On Camera Raw dialog  click "Open Image"
5) Camera Raw dialog closes, image opens up in photoshop main window
6) At this point, using main menu, select "Layers".  All entries are grayed out (disabled).
7) The Lyers palette is also non-functional.
Huh?
Like I said this hads to be somethign simple and stupid, I've scanned the online docs, searched the adobe forums, and googled.  Can't seem to find anything about this.
Any/all help appreciated.
Mike

The reason is most probably because you have opened your converted file in 16 bits mode, which does not support layers.
Either reprocess in ACR while checking the output to 8 bits (menu in the middle of the bottom bar)
or, convert to 8 bits in PSE editor    menu edit/mode... 8 bits.

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