Ok, assuming you are on a PC follow this file path:- Program Files\Adobe\Photoshop Elements 7.0\Plug-Ins\File Formats. Inside the file formats folder you will see a file called camera raw and the file type is .8bi . Right click on this .8bi file and check the version number and if it is anything other than version 5.6 then click on this link: http://www.adobe.com/support/downloa...jsp?ftpID=4624
and download the newer version onto your desktop. Double-click the downloaded file (it's a zip file) and inside you will find an .8bi file which is version 5.6 . Replace the original .8bi file by dragging and dropping it into the folder you originally opened. This 5.6 version of camera raw does support your 50D. Best of luck and of course let us know how you got on.
Thanks very much for this information. I had a problem with PSE7 and my new 7D, all sorted now thanks to you.