Sally,
Have you installed the Adobe Camera Raw (ACR) plug-in on your version of Elements 5? The latest version of ACR that Elements 5 supports is ACR v4.5. You can download a copy from here:
http://www.adobe.com/support/downloa...jsp?ftpID=4000
The installation instructions can also be found on this page. ACR v4.5 supports the D40, so you should be able ot process your raw files using this.
Duncan