Tony:
Thank you so much for the response. It is very weird and I did notice that the library structure is very different. But my camera creates a new folder for each day and places photos taken that day under that folder. What I had done was move them to another folder within the library called old photos which is where they reside as far as the folder. However, when I go and use ie8 with win7, I do get the hidden folder still showing up under the root directory listings when the pictures library is selected. Very weird. I figured maybe there is some sort of thumb.db file or some hidden file that is keeping the ghost folders showing up. We will try the firefox workaround. I did not know that they had firefox to work with win7 yet, so I will give it a try.
Good luck on finding an answer to the issue.
UPDATE, I DID TRY FIREFOX WITH THE JAVA AND EVERYTHING IS WORKING GREAT EVEN AFTER A FOLDER MOVE LIKE ABOVE. GUESS IT IS A GLITCH WITH SOMETHING TO DO WITH ACTIVE X IE8 AND WIN 7.
Sincerely,
Deb and Ron