There's a specific registry key that can be edited using the Windows Registery Editor, but that isn't very newbie friendly and can be dangerous if messed with by inexperienced users, so I'd recommend using a nice little (free) Windows utility named "OpenWithView".

Example (click for larger image):

So, if you need to just enable or disable any "Open With" program in your menu you can do it with that program. Easy enough to disable it so it doesn't show at all in your menu's any more. In the case of programs (like Photoshop) causing the problem you described, what you do is:

1. Disable the Photoshop item in the utility

2. Browse to the newer version of Photoshop in your normal Open With dialog box, as you normally would

3. Go back to the utility, Photoshop will still be disabled, so even though you just added the newer one, it still won't show up when you right-click since it's marked as disabled, so uncheck the box to re-enable it in your Open With list.

4. Profit

Now you should see the newer version shown and working properly in your normal Windows "Open With" menu.

Note: This works the same for any program misbehaving in the same way, not just Photoshop.