Correcting another human being is something that can’t be programmed into a computer or robot. It requires the sensitivity and sensibility of a teacher who, through experience, trial and error, will know when to correct his or her students.
When the student tries to speak in a language they’re learning, the teacher must make them aware that they will be making mistakes. Actually, they SHOULD be making mistakes.
“You should be making mistakes – if you stay only in your comfort zone you’re not making progress. Don’t be afraid to speak.”
How much do you want people to correct you?
It depends on your level – depends on the kind of interaction you’re having. If the student needs their new language only for vacation purposes the demands will be QUITE different from the needs they have to make business presentations, attend meetings, negotiate on the phone. 
The teacher must point out mistakes that might impede their understanding. Some key mistakes should be pointed out immediately to make students aware of their importance.
Example:
Student: “ Yesterday night I seed a film in tv. It’s about a napkin.”
Ok, teachers, what would you do now? Correct the verb tense, the preposition, right away? How about the mysterious show about napkins?
Again you have to consider the student at a pre-intermediate level. He knows the simple past tense and has already learned the past of the verb to see.
Teacher: “oh, so LAST night you…. (expecting student to self correct and remember and say “saw”). But was the film about paper napkins?”
Student: “No. when robbers take a person and ask money.”
Teacher: “Oh, it was about a KIDNAPPING. A person was TAKEN. Tell me more.”
Other mistakes should be duly noted and at the end of the session presented as feedback and students encouraged to write them down. The next class it would be essential for the teacher the review those points again so that students are ready to move on. Two classes later repeat review. One month later present the mistakes and have students correct them.
When the student gains more confidence the teacher will start correcting meanings and nuances – what better word / preposition to use / beyond just communication impediment.
The key is to reach a balance between accuracy and communication always being kind is way better than being right.
Cheers,
Mo
The Americanoid Blog 