When your system does not have enough RAM to perform an operation, Photoshop Elements uses scratch disks. A scratch disk is any drive or partition of a drive with free memory. By default, Photoshop Elements uses the hard drive on which the operating system is installed as its primary scratch disk.
You can change the primary scratch disk or designate a second, third, or fourth scratch disk to be used when the primary disk is full. Your primary scratch disk should be your fastest hard disk and have plenty of defragmented space available.
For best performance, use the following guidelines when assigning scratch disks:
Scratch disks should not be on the same physical drive as Photoshop Elements or any large files you are editing.
Scratch disks should be not be on the same physical drive as the one used for the operating system’s virtual memory.
Scratch disks should be on a local drive. That is, they should not be accessed over a network.
Scratch disks should be conventional (non-removable) media.
RAID disks/disk arrays are good choices for dedicated scratch disk volumes.
Drives with scratch disks should be defragmented regularly. Or better yet, use an empty drive or a drive with plenty of unused space to avoid fragmentation issues.