I just upgraded to Elements 2 as well and I have noticed the same problem using ME, not XP. Overall I'm happy I upgraded, I have noticed improved Despeckle filter and Unsharp Mask filter just to mention two.
Nardy,
I also use XP and don't have that problem with Elements 2.0 thumbnails. Are you sure you have all the newest patches installed to XP operating system? You might want to check MicroSoft's WEB site for updates.
Bob