iPhoto 8.1.2 runs fine under Lion (see http://forums.macrumors.com/showthread.php?t=1196559 ) as reported by other users. So I think your problem is due to the way you transfered the software from the old to the new computer. Just copying the application probably is not enough. It needs to be properly installed since various support files get placed in specific locations. Or it needs to be properly transferred (e.g. with Migration Assistant, or Setup Assistant, which take care of those other files it needs).
The easiest solution is to simply purchase the newest iPhoto from the App Store unless you have the patience to troubleshoot your situation.
Thanks for your reply, Steve. I went ahead and purchased the newest version of iPhoto and it worked. Since I just manually transferred all of my files (I'm sure not all of them did), should I use Migrant Assistant and would going back to do this delete all of the files I just transferred or would it give me the option of keeping or replacing existing files?
Well, I just realized that when I open Migration Assistant on the iMac to initiate the transfer, it asks to open Migration Assistant on the MacBook (computer I'm transferring data from), however, I can't, because the MacBook hard drive is in an enclosure and not in the computer itself. During the process, it closes all applications while it waits to discover the computer (MacBook), but it doesn't appear, and, I can't open the MacBook hard drive becuase it is connect to the iMac via USB. So, I can't use Migration Assistnt with my current setup. Any other tips? Thank you.
When you first run Migration Assistant, it asks you if you want to transfer from another Mac, from a Time Machine or other disk, or from another startup disk attached to this Mac, among other options. You want to select the option to transfer from a disk, namely your old disk, which you need to connect to the new computer via USB or Firewire.
Since you have already been using the new computer some, there may be a danger of overwriting some of your new things when doing this. Migration Assistant works best on a new, unused computer (or on one you have just erased and installed a new system on).
I think there are two good choices for you here, and either will work, I've done this in the past each of these ways successfully:
(1) Do the transfer "manually" as you have so far. iPhoto might have been the exception, and it is possible most of your other programs will work given how you manually copied them over. I'd try each of them out, and if something doesn't work, reinstall it or find another work around (as you did for iPhoto). It is easy, of course, to simply copy your data files over. It's the Applications that can be trickier, and things like Mail. However all this can indeed be copied over manually, you just need to find out where certain files and folders belong and put them there. (That's really all that migration Assistant or Setup Assistant does anyway ...). More complicated programs like MS-Office or Photoshop should be reinstalled on the new system, unless you try option 2 below.
(2) Do an erase and clean install of a brand new Mac OS on the new computer (back up what you have first in case something goes amiss) and then on the first boot after doing that, run Setup Assistant (which is a special version of Migration Assistant; it will come up automatically on first new boot) directing it to use that external drive to migrate from. This is the cleanest and easiest approach, but it might be disruptive if you've been using your new Mac already for a while.