Found a solution. I had tried everything including creating new account and getting rid of the file suggested which did not help.
Here's what worked.
1) Highlight the photo you have in the project, within the project window itself, that isn't playing properly
2) Right click
3) Select Reveal in Finder
4) Right click on the file name when you see it on the list of files
5) Click Duplicate
6) Drag the new file (duplicated file) into your project
7) Voila, photo now shows up correctly!
8) Worked for me. I hope it will work for you!
Message was edited by: LisaAE