How on earth did you manage to get PSE to end up with a 640x480 jpeg weighing in at 762 kB?!
Sorry Tiny! - My statement may have been a bit misleading. The screenshot (1024x768 bmp = 2,305kB) was reduced in PSE to a 'Save for web' (1024x768 jpg = 762Kb). - Then I used Easy Thumbnails to produce the (640x480 jpg = 120kB)
I don't know why I bothered going through the PSE stage, - force of habit I guess! - All I wanted to do
on this occasion was show the capabilities of Easy Thumbnails, and produce the best quality pic within Morgan's limitations. Hence the 120kB.
... I could have made it much smaller! - but lower quality!
Why do I bother using Easy Thumbnails, when I could do it all in PSE ..... I hear you ask! .....
Because it's so easy! 
Stick with PSE is my suggestion.
I will use this recent addition to one of the pages on the Husteads web site as an example. There are 5 small images in that section of that page, and each one can be enlarged by clicking the button in the corner of the pic.
(on the website!)
I chose 5 of the shots I had taken that day, and worked on them in PSE to make an image good enough for a quality A5 print, -
(for if I decided to print any). - Then using Easy Thumbnails, the 5 small 'thumbnails', AND the 5 enlargements were quickly and simultaneously produced for the web page, from the print quality copies, with the very minimum of effort.
The file sizes too were kept to a minimum, as all 10 image files required uploading to the host, - and there are currently well over 500 on the website!
I don't know of any method within PSE whereby you can produce a 'batch' of thumbnails
(and their accompanying enlargements) with the speed and convenience that I get when using Easy Thumbnails! ... If there is, please tell!
I always do all preliminary work in PSE first, - only when I have a finished product do I use ET, - for website use!