I have always wanted to learn to use photoshop but I have never
had my own copy... I currently have the demo version of CS2 but
that will only last another 25 days...
Would it be smarter for me to buy a new copy of elements or a used/
outdated version of photoshop like v5,6, or 7?
I think going by the route of outdated version will help you better. IMHO newer version means "basic tools + advance tools + some new tools + some redesigned tools" for making workflows shorter and more effective. While element is just some basic tools targeted at hobbyists and some basic level usage. Going outdated will definately give you a broader perspective of the power photoshop has. But as always, its not the software but the artist. So it all boils down to what you actually want to be using photoshop to do at the end of the day. I know some very talented artist who still produce very beautiful and pro work using v7.
Then, I'm not exactly sure if its allowed to buy a used version of the software (as most softwares actually come as lease not total ownership, so, transfering ownership sometimes isnt allowed. At least I know that about Maya)