Can Photoshop Elements create a selective color effect?

Yes. You can do this in Photoshop Elements, typically in Expert mode.

A simple method is:

1. Duplicate your image layer.
2. Convert the top layer to black and white.
3. Add a layer mask to that black-and-white layer.
4. Paint on the mask to reveal the color from the layer underneath only in the areas you want to keep in color.
5. Flatten and save when finished.

This is the usual selective color workflow and is generally easier and more controllable than manually “sponging” color in or out. Masking lets you refine edges and adjust the effect non-destructively while you work.

So if the effect you want is a mostly black-and-white image with a selected subject or area remaining in color, Elements can handle it.