Neal,
During installation you get a chance to select the file types that will be opened in PE3 when you double click them. I only mention this so that if you ever end up reinstalling you can make your choices then. For now in Standard Edit click Edit and select File Association near the bottom of the drop down list. Uncheck those file types that you do not want to open in Elements. You probably want to leave at least Photoshop PSD, Photoshop PDP and, if you shoot in RAW, Photoshop RAW checked.
If that does not work go to My Pictures, right click an example of the type of file you don’t want to open in PE3, choose Open With, at the bottom of the drop down list click Choose Program. In the new dialogue that opens highlight the program you want and check "Always use the selected program to open this kind of file". Click OK. You will have to do this for each file type (eg jpg, tif, bmp, gif) that you want to open in another program.
I’m not sure that Outlook itself can open pictures (I’ve never used it as my email program). If it’s the same as Outlook Express the program you want is "Windows Picture and Fax viewer".
Bob