Yes - I realise I should have started another thread but here is the answer to my own question - I have now bought PS Elements 7 and it works seamlessly with my Canon 40D Raw files.
What an amazing piece of software!
Peter
A word of warning about the Arcsoft viewer - if you have previously installed the MS RAWViewer powertoy add-in (which does not work with 40D CR2 files) then you will need to uninstall this before you install the arcsoft Raw thumbnail viewer.
I spent some time wondering why I still couldnt...
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