Place object suddenly not working - please help

Question

I have been using PS successfully for a few weeks now. But suddenly when i go to FILE....PLACE - photoshop is not acting like it used to. It places the object as a "smart object" and i cannot see it on the canvas. The only way to see it is to click on the little thumbnail on the layer - which it then opens in a seperate file. In the good ole days (of last week) when i place a file it would show up as expected. I've restarted PS, deleted preferences, and tried placing multiple files. Some files place "normally" and some are creating this problem for me. PNG's seem to work normally - but JPG's are not placing. So i converted the JPG to PNG - but PS does not fall for my trick - it still will not place the object so that i can edit it.
This is incredibly frustrating. What am i missing in this incredibly temperamental program?

Answer 1

I think this is connected to my problem above - another new behavior.
1. I open a file - PS automatically makes it a background image.
2. When i convert it to a layer - it disappears from my canvas. I can still see the image in the thumbnail of the layers panel - but nothing on the canvas.
What is going on here?