IPhoto 6 - Photoshop Elements 4.0 Synergy

I bought PE 4.0 at the Apple store based on the Machead's assurance of compatability (synergy) with iPhoto. I'm either doing something wrong, or the techie-type was off the mark.
In iPhoto, I've renamed (via batch control) a series of photos from the camera's default naming format to something more readily recognizable (PICT 24245 to "NC Waterfall 01," PICT 24246 to "NC Roadkill 03," etc.). The renaming took place as it should in both the Library and the Album created. However, when I attempt to Open a file in PE 4, all that's displayed is a) the Library, and b) the old filenames (PICT 24245, etc.). There is no display of any of the albums created, nor is there the proper naming displayed ("NC Waterfall 01," etc.)
This leads to a second problem: Without some sort of hierarchal "tree," saving the file (after working on it in PE 4) to the proper Album is not possible. It's my understanding that an Album is simply a folder, so shouldn't it stand to reason that it should be located at some place like "iPhoto/Library/Waterfalls?"
As it is, I can Save it to the Library, but then I must drag the new image into the proper Album.
The last part of the mystery refers to the first problem: Opening an image file in PE 4. If I have iPhoto open alongside PE 4 and then attempt to "grab" the image and bring it manually into the new window created for editing, it promptly springs back to its place in iPhoto. Not exactly drag & drop, heh?
Any help would be appreciated.
P.S. ---I'm a Newbie, so go slow, please.

GF:
Welcome to the Apple Discussions. When you rename a photo within iPhoto all you're doing is changing the title as displayed by iPhoto. The actual file is not touched. if you open a file with PE it should be from within iPhoto via iPhoto's General preference pane where you can select PE to open a photo when you double click on the thumbnail. Then it will open the original file with original file name. If you do an edit in PE that requires a change of extension, like creating a layered image file, it MUST be saved to the desktop and then imported as a new file. If the PE edit does not require an extension change then a normal save will result in the edit being recognized by iPhoto in the main library and in any albums, books, etc that the file is in.
You should be aware of the warnings in Don't tamper with files in the iPhoto Library folder from the Finder. Editing a file with PE from the Finder is violating that warning.

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