Same here: beach ball.
OS X at 10.8.5, iTunes at 11.1.4 and iPhoto at 9.4.3, running on MacBook Pro 15 , end 2011 edition.
Same problem: iPhoto library moved to Synology drive.
Works fine with iPhoto itself.
But can't believe what I'm reading: this should be an issue with iTunes and can only sync photos when they are stored on a local (or at least locally connected) harddrive ?
I can only second Eugene: "HEY APPLE FIX THIS MORE ARE USING EXTERNAL DRIVES TO STORE STUFF"
Nor can I believe that noone from Apple is commenting on such a major problem.
No, end I will not move any of my stuff (fotos included) to the iCloud. Guess why I did not (and will not) update to Maverick !
Perhaps you should concentrate your efforts more on product development than on marketing. But while Apple is already asking me what my verse will be, here it is:
"To Apple:
What a friendship for so long
with ties that grew so very strong.
You helped me and I helped you.
That is what good friends always do.
But slowly, slowly creeping in
was on you immortal sin.
Call it "hubris", call it "pride",
which to employ, I can't advise,
but friendship did no longer guide
your plans for service and device.
Despite my will you tie me in
to things that to you profit bring.
Is what you do still planned in kind
With needs of others high in mind ?
Or are we, as on me it dawns,
in your game but minion pawns ?
All this in mind I must conclude,
and by no means I mean it rude:
if friendship only helps but one,
beware of it and run, run run.
Instead of loyal, I'd rather be smart
and will from Apple soon depart."