I've also been using Photoshop forever. Got my first version on 3.5 floppy disks in the 1990s. Today i was trying to rotate a picture and it was grayed-out. I thought, "I've used that so many times before (in Photoshop Elements). I know, I probably have to convert to a .PSD." So I did that and it didn't work. So I went hunting and found this. Many thanks to Jeff Arola.
If R_Kelly's suggestions don't work then you could try Free Transform Mode. For that I suggest watch this video:
The idea is you press CTRL+T and you get a boundary around the image. Point your mouse just outside one of the corners and slowly rotate the picture with your mouse. Watch the Video and see if that works better for you.
The Video is for Photoshop but it works in Photoshop Elements as well so worth a try.