I don't think it would be necessary to go throught pain and hassle of a clean install etc. You should be able to "get info" on the file that you want (the .psd file). Go to "open with" in that window and select the app:
PSCS2 or whatever. Then press the button underneath "Use this application to open all documents like this" and change all. That should do the trick.
Photo678, I don't mean to contradict you on the clean install but I do want to add that you are probably right it does have to do with permissions etc. Sometimes the computer just forgets what the hell is going on.
Good luck.