System: Win7 Pro 64-bit.
Already tried resetting preferences. Should have mentioned that in the previous post. After I was met with no success earlier I checked for this errant behavior on my laptop. It was doing the same thing. The only thing they had in common was the installation of onOne Perfect Photo suite 9 Premium. I used system restore to back up to before that installation and .png files were once again available.
I attribute this problem to onOne. I tried system restore on the desktop that I first noted the issue on. For some reason it would not restore to before the update/upgrade so I'm still getting the same .png error on the desktop. I've sent a support request to onOne with screen shots a description of the problem.
Regarding plugins from an older version. No I didn't copy/move any point preferences>plugins>additional plugins to another version of photoshop.
I appreciate the input and will update here when I have more information.