I am using Windows 7 and Picasa 3.8 and am unable to create a collage on this computer (although I am successful on another one just like it that I own).
I believe the problem relates to accessing the User library for pictures in Windows 7. I am unable to directly write to that file and I believe that may be where Picasa attempts to save a collage. I get a windows error code 512 when I try to write directly to that file (I can write to it indirectly). Not sure if it is a Windows 7 or Picasa problem (or both).
Any help appreciated.