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Thanks for all your comments.

I asked my friend to elaborate & he said, (his words), "I'm not an idiot, I know how to view thumbnails in Explorer!".  He does indeed have thumbnail view activated & has all other image file type icons showing as thumbnails - all except PSDs, which just show the regular icon.

In PS, he has the file saving options set as the default - always save image previews.  Checking the file type in folder options didn't shed any light either - all is as it should be.  He didn't have any problems with PS7 & is totally baffled!

Apparemtly Mac users have more options re. file handling preferences & I was wondering if this somehow related?

But as one of you said they're running XP & CS & have no thumbnail issues...the mystery continues!

Thanks again for your comments.  I probably will end up buying CS...I'm one of those superficial people who like to keep up with the Jones's!