I can click on the thumbnail image but the alert says original image can't be found.
Are you running a Managed or a Referenced Library?
A Managed Library, is the default setting, and iPhoto copies files into the iPhoto Library when Importing. The files are then stored in the Library package
A Referenced Library is when iPhoto is NOT copying the files into the iPhoto Library when importing because you made a change at iPhoto -> Preferences -> Advanced. (You unchecked the option to copy files into the Library on import) The files are then stored where ever you put them and not in the Library package. In this scenario you are responsible for the File Management.
I Import the jpg or tif to Iphoto then delete original images as they show in the Iphoto library.
Exactly how are you "deleting" the original images?
Iphoto will not open the imported image, I can click on the thumbnail image but the alert says original image can't be found.
Do you have a default "managed" library (the iPhoto preference to "copy imported items to the iPhoto library is in its checked state) or a referenced library (you have unchecked that preference)