Shared iPhoto library file permissions are corrupted.
I am using the alternative option mentioned in the technote. The iPhoto library is located in /Users/Shared.
When my wife adds photos to iPhoto from her account, the files have a permission set of 640 (rw-------) on the file system.
When I add photos from my account, the files have a 666 (rw-rw-rw-) permission set.
I found that by using the iPhoto 'Examine and repair iPhoto Library file permissions' process it fixes the issue..although I'd really like to find the main cause of her files have a 640 permission set.