Sadly, there is no publicly available codec for the Photoshop PSD format but the newly released Microsoft Expression Blend 3 design tool (which, by the way, is nothing short of amazing for WPF and Silverlight design) includes such a codec so installing Blend 3 automatically installs the PSD codec. For those who don’t have a need for Blend and don’t want to install it, here is a little hacking guide to extract the codec (a 256KB dll) and use it separately:

Get the codec and its dependencies:

Download Microsoft Expression Blend 3.0 (3.0.1927.0 7/20/2009) Trial: Link
Using 7-Zip, open ‘Blend_Trial_en.exe’ from step (1) and in the ‘Setup’ subfolder, open ‘BlImp.cab’ then extract ‘PSDCodec.dll’
Download the Visual C++ 2008 SP1 Redistributable Package (x86): Link

Codec installation:

Install the VC++ Runtime by running vcredist_x86.exe from step (3) above.
Copy PSDCodec.dll from step (2) to some location on the harddisk, e.g. “C:\Program Files\PSDCodec”
Register the codec from an administrator’s command prompt by running the following command: regsvr32 “C:\Program Files\PSDCodec\PSDCodec.dll”

That’s it, Windows Vista Explorer should soon begin to display thumbnails for all PSD files that were saved from Photoshop with the “Maximum Compatibility” option. As a side effect, WIC-aware image viewers such as FastPictureViewer Professional (http://www.fastpictureviewer.com) automatically benefit from the codec installation and uses it to open and display the same PSD files with full fidelity.