If I've understood you right there are some inconsistencies with your posts. Post 2 talks about beach balls and goes on to say you went on to upgrade to Mountain Lion and added more memory to arrive at 4GB.
That means you were originally running Lion on LESS than 4GB (could have been 1GB for all we know) ... the absolute bare minimum for that OS. So that could be why you had the beach balls.
Assuming you originally started with Snow Leopard, the iPhoto you should have reached while there would have been iPhoto 11, which was a free update with SL.
I'm not meaning to be picky ... just clarifying the facts. I notice too that your profile is still showing 10.7.2 (did you update that OS to 10.7.5 before you went on to ML.)?
Luckily for you, I see your post has gained the attention of Terrence Devlin (I hope he won't mind me adding 'our resident guru')
Hope it all works out for you.