Several users have reported an issue in which iPhoto ’11 asks to upgrade the library every time the application is launched. This problem may be accompanied by an inability to view thumbnails, see projects or create projects.
On October 30, Apple released iPhoto 9.0.1, which “addresses issues that, in extremely rare cases, could result in data loss when upgrading a library from an earlier version of iPhoto,” and noted that users should install this update before updating to iPhoto ’11.
However, some users are still experiencing a problem in which iPhoto ’11 states that it is “Unable to Open this Library,” even after applying the iPhoto 9.0.1 update then attempting to update their application and library to iPhoto ’11.
Potential fix
Some users have reported that this issue can be resolved by issuing a series of Terminal commands, as first reported by Apple Discussions poster darktooth:
Launch the Terminal application (click the Spotlight [magnifying glass] icon in the upper-right corner of the screen and type “Terminal”)
Type: sudo chown -R yoursername then press the space bar and drag the iPhoto application from the Finder to the Terminal window. Press return.
Repeat the following process with these commands (enter the command, press space, drag iPhoto app to Terminal and press return):
sudo chmod -R -N
sudo chmod -R u+rwX