IPhoto 8 (iLife 09) to iPhoto 9 (iLife 11) Library Problems - Help!

Question

Hi all,
Yes, I know, this has been discussed to no end since iLife 11 was released, but I'm genuinely having issues and I could really do with some help.
I have been refusing to upgrade to iLife 11 until the problems have been solved and today I read that the issues are now resolved and I can confidently upgrade (however I was wrong).
I simply did the normal installation procedure, inserted iLife 11 disc, installed, upgraded with software update (twice), and tried running the new iPhoto. But I deeply regret it, as now iPhoto prompts me to upgrade my library on launch, but a few seconds after clicking upgrade, it says: 'iPhoto is unable to open this library'. I've scoured the net trying different things including permissions repair, etc but nothing has resolved it.
I noticed that my library file is 12GB which seems rather small as I had quite a lot in there, although I'm not sure how much it was originally as I never check the size.
Some major problems I have in attempting to fix this issue are, 1.This MacBook was purchased years ago second hand and didn't come with discs (so no previous version iLife discs), 2.I have not been able to use Time Machine to backup as my external drive had ran out of space over a year ago, and I simply have not had the spare cash and time to just shell out on another drive.
So if anyone can give me any advice and help here I would be greatly appreciated. I have a feeling I've lost all my photos from the past few years including all my family's digital photos, but trying to be optimistic.
Thanks
WaxMechaniK

Answer 1

Terence, you are a massive help! I thought I had to pay for that software, didn't realise the free version did what I need. Thank you very much!
Luckily, I didn't have any slideshows/books/calendars, BUT I noticed that it didn't seem to read all the photos. As far as I can see right now, it hasn't imported any of the photos imported after March 2010, is this normal? The photos imported after this date were actually in the Originals folder so I'm importing them back in that way. I might be best off going through them all to make sure everything is there which will take forever. I've kept a backup of the old library file just in case.