When "use as system photo library" is grayed out in preferences that means that the library already is designated as your system photo library.
Try restarting your computer and see if that clears it up. If not, try booting up in Safe Mode (see Help menu instructions).
Make sure that you have sufficient free space on your drive for the Photos app to function efficiently.
Is your Photos library located on an external drive? If so the drive should be formatted Mac OS Extended (Journaled). Reformatting erases all data on the drive, so if you reformat be sure to back up any data that you want to keep, including your Photos library.
Also, I note that in your post's data it shows that you are using OSX 10.10, that is pretty old. You might consider first backing up your Mac and then upgrading to a newer operating system. That would also operate to upgrade your Photos app version. I don't know if that would help, but just thought I would mention it.
-- Rich