Thanks for the further details. I have not seen that specific syndrome previous. But, Premiere Elements 9.0/9.0.1 was always known for its display issues more so than other versions. Why the Timeline and not the Sceneline workspace clouds the situation somewhat.
Things to explore:
Delete of the Adobe Premiere Elements 9.0/9.0.1 settings file named Adobe Premiere Elements Prefs file. And, if that does not work, then delete the whole 9.0 Folder in which the Adobe Premiere Elements Prefs file exists. I am not sure of the path since I do not have Windows 7 32 bit. I am not sure if the path will fall into a XP or 7 scheme. In Windows 7 64 bit, the path is
Local Disk C
Users
Owner
AppData
Roaming
Adobe
Premiere Elements
9.0
and in the 9.0 Folder is the Adobe Premiere Elements Prefs file that you delete. And, if that does not work, you delete the whole 9.0 Folder in which the Adobe Premiere Elements Prefs file exists. Be sure to be working with Folder Option Show Hidden Files, Folders, and Drives active so that you can see the complete path cited.
Next, I would like you to delete the BadDrivers.txt file. In Windows 7 64 bit, the path is:
Local Disk C
Program Files
Adobe
Premiere Elements
9.0
and in this 9.0 Folder is the BadDrivers.txt file that you delete.
If that does not work, then it is time for the deactivating the program from within an opened project's Help Menu/Deactivate. Close out of there.
Uninstall via the usual Control Panel/Programs route. Free ccleaner run through (regular cleaner and registry cleaner parts)
Reinstall with antivirus and firewall(s) disabled.
Please let me know if we have to look deeper for the location of the mentioned files in your specific computer operating system.
Thanks.
ATR
Add On...The answer may turn out to be a new project and starting again, but we will try to salvage this project.