CS3 Won't change extension in Save As

Hello,
I've run into a rather frustrating problem that I've been trying to fix all day with no luck.
I recently formatted my computer and reinstalled Photoshop CS3. However when attempting to save a JPG from a PSD, it dosen't allow me to. What happens is that I can select JPG from the drop-down options. However the extension in the filename bar dosen't change from xxx.psd to xxx.jpg. It simply stays as xxx.psd. If I still hit save it saves as a PSD.
I've tried changing the file extension in the save menu and also in the explorer after I've saved. However if I do the first option I can't batch process because it just continiously overwrites the same JPG file. The section option also removes any possibility of doing patching since I have to do one at a time.
So just to confirm. I am saving flattened, 8 bit, RGB files. So that isn't the problem. I also have the option to show extensions enabled in the folder options so I know it's not a matter of a hidden extension or double extension. I've also tried saving into various folders with no success. I have also tried a complete uninstall and reinstall of PS. As well as doing the repair option. Neither worked.
I can't think of anything else to try so I'm really hoping someone can help me out. It's incredibly time consuming to have to individually save each file as a JPG when I'm working on 50+ files at a time. Thanks for your time and help!

Sorry, I thought I might be onto something...
What you're experiencing does not normally happen to most people.
Just to be absolutely clear we're communicating, I did this:
1. I opened Photoshop CS3.
2. Opened an existing PDS file of mine named: BluesInACR.psd
3. Image - Mode - 8 Bits / Channel.
4. The document window title says: BluesInACR.psd @ 100% (Camera Raw, RGB/8)
5. File - Save As, changed Format from Photoshop (*.PSD;*.PDD) to JPEG (*.JPG;*.JPEG;*.JPE)
6. The instant after having chosen the JPEG format, the filename changed to: BluesInACR copy.jpg
7. After I saved the file as a JPEG, the document title still reads: BluesInACR.psd @ 100% (Camera Raw, RGB/8)
What does your Save As dialog say in the bottom left corner? Mine has a button that says [ Use Adobe Dialog ] (implying I am using the OS dialog).
-Noel

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Policies\Administrative Templates\Policy definitions(admx files retrieved from central store\Microsoft Word 2013\Word Options\Advanced\File Locations\Default File Location = Enabled\Documents = F:\
-------gpsvc.log sections containing the aforementioned GUID start---------
GPSVC(410.1730) 09:10:51:186 ProcessGPO: ==============================
GPSVC(410.df0) 09:10:51:186 GetGPOInfo: ********************************
GPSVC(410.1730) 09:10:51:186 ProcessGPO: Searching <cn={DC3C93EC-7C28-48E9-BA38-FCA1E275A207},cn=policies,cn=system,DC=gc,DC=local>
GPSVC(410.1730) 09:10:51:186 ProcessGPO: User has access to this GPO.
GPSVC(410.1730) 09:10:51:186 ProcessGPO: GPO passes the filter check.
GPSVC(410.1730) 09:10:51:186 ProcessGPO: Found functionality version of: 2
GPSVC(410.1730) 09:10:51:186 ProcessGPO: Found file system path of: <\\gc.local\SysVol\gc.local\Policies\{DC3C93EC-7C28-48E9-BA38-FCA1E275A207}>
GPSVC(410.1730) 09:10:51:186 ProcessGPO: Found common name of: <{DC3C93EC-7C28-48E9-BA38-FCA1E275A207}>
GPSVC(410.1730) 09:10:51:186 ProcessGPO: Found display name of: <U-Word 2013 Default Save Location>
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GPSVC(410.1730) 09:10:51:191 ProcessGPO: Found flags of: 0
GPSVC(410.1730) 09:10:51:191 ProcessGPO: Found extensions: [{35378EAC-683F-11D2-A89A-00C04FBBCFA2}{D02B1F73-3407-48AE-BA88-E8213C6761F1}]
GPSVC(410.1730) 09:10:51:191 ProcessGPO: ==============================
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GPSVC(410.1730) 09:10:51:191 ProcessLocalGPO: GPO Local Group Policy doesn't contain any data since the version number is 0. It will be skipped.
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-------gpsvc.log start---------
-------output of gpresult /r-------
Microsoft (R) Windows (R) Operating System Group Policy Result tool v2.0
Copyright (C) Microsoft Corp. 1981-2001
Created On 5/30/2014 at 9:24:08 AM
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OS Version:                  6.1.7601
Site Name:                   Default-First-Site-Name
Roaming Profile:             N/A
Local Profile:               C:\Users\ssanders
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