Tough call, but I think I'd go with the scanner with Elements 1 and Richard's book. Getting a good scan is the first step in any restoration. You might want to read
this thread about the differences between Elements 1 & 2.
The one caveat here is that I'm not familiar with Elements since I do all my work in Photoshop 7, but I
think you will be happier with a good scanner than the additional features in Elements 2 if your goal is photo restoration.
Jeanie