Thanks for the input folks. I do a lot (and I mean A LOT) of digital scrapbooking. The files I want to put into another catalogue are all related to this. They are digital papers, elements, backgrounds, textures, masks etc saved as layered .psd, .png, .jpg formats. They are not photographs per se. I did have them in a separate catalogue at one stage but combined them when PSE11 catalog would do it's own thing but now with >30K scrapbooking files and >25K of photographs the catalogue is just too cumbersome and time consuming to 1. load and then 2. change to the directory tree I prefer to work with.
In case you haven't guessed I really dislike this version of the catalogue I much preferred version 9 and I don't want to go to version 12 and find I have similar or more problems. If I could use PSE without involving the catalogue at all I would but some things just have to be done through it which is a real pain in the butte.