Gee, I found the problem.
I started my scanner first then booted the computer and launched Photoshop. It sees the scanner from the File> Import command. Before all I could see was File> Import> Variable Data Sets... Annotations...
I turned off the scanner, rebooted the computer, and then restarted the scanner, and there is no scanner to be seen.
So, bottom line, I need to start the scanner first.
PSE 2 was never so picky.
Thanks for your help.
Daniel