This is a tutorial for Photoshop Elements' free transform tool, with a focus on resizing and rotating items without skewing or distorting the item. The screen shots are from PSE version 8, but the concepts apply to all versions. As always, click on any screen shot to see it full sized.
Notice that the bounding box on the photo changed slightly, now that the Free Transform tool is in action. It went from dotted lines between the squares to solid lines between. Also notice that the menu above the working space has also changed.
When you begin to resize your photo, you need to verify that the "Constrain Proportions" box is checked (notice red checkmark). Now click and drag one of the corners of the photo to make it bigger or smaller (note, in the program the cursor will change to look like a small double headed black arrow when you are on the corner). Notice that the percent resized is equal for both width and height, designated W: and H: within the red circle (both are 44.4% here).
The tool item that is underlined in red here shows the degree of rotation. It's nice sometimes to know the exact degree of rotation so that you can match up exact angles on other items, if you need to do so.
When you finish resizing and rotating your photo, simply click on the green checkmark that appears below it whenever the Free Transform tool is selected. Doing this makes your changes. Clicking on the red circle with a line through it undoes your changes.