Issue
When you import an Adobe Camera Raw file into the Organizer in Adobe Photoshop Elements 3.0 or 4.0, Photoshop Elements displays rotated Camera Raw images in their original orientation rather than the rotated orientation.
Details
You installed the Camera Raw 3.5 update.
Solution: Install the Camera Raw 3.6 update.
Download the update from the Adobe website at www.adobe.com/support/downloads.
Background information
When determining whether or not a Camera Raw file should be rotated, the Organizer in Photoshop Elements 3.0 and 4.0 does not read the orientation flag in the metadata of the Camera Raw directly. Instead, the Organizer relies on the Camera Raw plug-in to read the flag and pass back the orientation information.
Changes were made in the Camera Raw 3.5 plug-in to support functionality in Photoshop Elements 5.0, which was developed at the same time. These changes prevent the Camera Raw 3.5 plug-in from correctly passing the orientation information to the Organizer in Photoshop Elements 3.0 and 4.0. The Camera Raw 3.6 plug-in compensates for these changes so that Camera Raw files are correctly oriented in Photoshop Elements 3.0 and 4.0.