Question: Why were the elves happy to see Scott and Charlie on their return to the North Pole? Their presence obviously meant that the old Santa was dead.
Answer: As the various Santas periodically are killed or die by other means, the elves appear unsurprised and are happy and relieved that they don't have to worry about having a replacement. They also seem pleased to see young Charlie, who wasn't expected. I haven't seen the movie in years, but I seem to recall that the previous Santa wasn't particularly liked or was somewhat incompetent.
Maybe they could "sense", so to speak, that Scott would be the new Santa and that the old Santa had died and had some time to adjust to it. Maybe they weren't smiling at the fact of the old Santa dying, just that they had a Santa at all. Also, while nobody was expecting Charlie, he's still a kid, a.k.a. the heart and soul of Christmas. Why wouldn't they be happy to see that?
Answer: Unbeknownst to Scott, Charlie, and the viewer, Scott became the new Santa the moment he put on the Santa suit on his roof. Because of this, the elves don't even see him as Scott, but as Santa. His arrival also meant another successful toy delivery and the continuation of Christmas itself.
Invader_Gir
It should be noted Tim Allen thought this was odd too and had this exact thing corrected in the series The Santa Clauses, where it was confirmed the old Santa decided to retire and basically fell off the roof on purpose. The Elves already knew the one Santa was leaving and a new one would be coming, which is why they were excited and never brought up the old Santa.