First of all you can create DEM's from stereo pairs providing you have the correct sensor model information and a triangulated solution for the imagery. With this triangulated information the parallax from the imagery can be exploited to create DEM's.
I'm not sure exactly why you can't get this working, but i would be more than happy to look into it for you. Send me an email with the block file attached and i will see if i can point out any errors. Otherwise, i may need to ask for the imagery and try to recreate it myself or have my support team help me out. Here is my email: Joe@erdas.com