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I am working with one of the adobe staff to get info on this problem. Apparently if you open a NEF or RAW file, the JPG option appears when saving but the processing on the raw file is limited due to proprietary info from Nikon. I have found that for the most part it is best to either use Nikon Capture or Nikon View in dealing with NEF files. If later you wish to manipulate the JPG file in PSE or PS, that works well. Overall if you are an amatuer and dont care about pro things with your photos, go with PSE. If you are a photographer, go with PS and edit the JPG file directly. Yes, you do lose some quality each time you open and close a JPG, but if you set the quality high, its minimal. So for example, open the JPG, fix a little red eye…save it. Hope this helps some people.
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