Bill,
If you’re running Mac OS, PSE 2 run’s native in OS X. I can’t remember exactly what the other differences are, it’s been so long since I used version 1, but I think the Quick Fix menu choice is new. It allows you to "quickly" fix problems common with digital images. Very nice for a guy like me who doesn’t want to spend a lot of time fixing photo’s (read lazy). I think the "Save for Web" is new too, but I could be wrong on that.
Mikkel Aaland has a web page at this address, <
http://www.cyberbohemia.com/Pages/photoshopelements.htm> that goes into more depth on what changed between version 1 and 2.
Joe