Mac Lion fighting APE 10 as default for APE format!

There is some conflict between Lion 10.7.2 and Adobe Photoshop Elements 10.0.2(etc). Lion is now preventing me from specifying Adobe Photoshop Elements as the default program to open . . . its own file format (*.PSD).
Would love someone's help on this.
The behavior is strange. When I use Open With, then scroll down to Other, and click on APE 10's icon, the light blue Open option is alive. But when I click on the icon or on Open, Applications kicks over to a subdirectory, same name as the first one (is that the problem?), and Open is no longer available. Only Cancel.
Very frustrating!

You're probably setting the welcome screen as the application and OS X knows that's not what you want. The actual PSE application is hidden inside the support files folder in the PSE 10 folder in applications:

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