Solved! I'm just answering this question in case someone has the same issue...
- Update your graphics card drivers. (All of them!)
- If you have more than 1 card be sure the stronger one handles adobe premiere.
My laptop has 2 graphic cards
- Intel HD Graphics
- NVIDIA GeForce GT 330M
First I updated the driver of Intel HD graphics by uninstalling it from Device Manager (which is a bad idea as the screen disappears any way) then restarted my computer. Than Windows found the driver, installed it Restart number 2.
Now I tried Elements, great it worked! But... consuming 7.5 GB of RAM!!! (Virtual and Physical combined)
This time I don't know why, I just had to try it, I updated my NVIDIA driver (which had 2 updates) and from NVIDIA console I marked Adobe Premiere Elements.exe to use the NVIDIA graphics card.
Than I tried it and Elements worked perfectly...