In TipSquirrel there is a tutorial on "Unifying an image with Selective Color" By Michael Hoffman. Can this be done with Photoshop Elements.
I am not very knowledgable on Photoshop Elements as I generally use Lightroom 4.
Duplicate the layer, and on the top layer convert it to black and white. Then add a layer mask and mask through to the underlying colour layer the area you want to be in colour.
Then flatten and save. Simples :)
EDIT: YES you can do this in Elements - in "Expert mode"... I've done it myself!