Open your photo in Photoshop Elements 3.0 and desaturate it (Enhance > Adjust Color > Remove Color). Duplicate the background layer by dragging it to the "Add Layer" icon.

Invert the new copy (Filter > Adjustments > Invert). Set the inverted layer to "Color Dodge" blending mode, and your image should be totally white.

Go to Filter > Blur > Gaussian Blur, and adjust the blur until you get the "pencil sketch" you want. "Flatten" the layers before saving the file and then open it in Painter Essentials 2.

In Painter Essentials 2, create a new layer, select the "Basic Round Tinting" brush and a light flesh tone, then paint in the face. Don't worry if you paint outside the lines, just turn your pen over & use the built-in "eraser".

Vary both the colour and pressure you paint with as you go to give the face a more natural look. A light touch with the "eraser" brings out the face highlights.

A quick wash of watercolour on the hat, t-shirt and grass background - Your "watercolour & pencil sketch" is finished !!