I can longer transfer photos from my mac to my phone using iTunes. What happened?

I've transferred photos to my phone from my iMac with no problem at all for a long time. With recent updates, it seems the pictures in iTunes are not showing.

I keep my iPhoto library on a connected external drive and have for a long time. I noticed updates to my selected photos were not transferring. Upon investigation, I see that the "pictures" folder in iTunes is now defaulting to my local drive (where no actual photos reside). When I try to change folder to my iPhoto folder, it just stays grayed out, nothing happens, no photos show.

As an experiment I put a few photos on the local drive in the pictures folder and it will let me transfer those photos.

Is this a glitch or am I not setting something up correctly after recent software updates?

I can transfer photos from my phone into iPhoto just fine.

Seems the issue is iTunes related to the network drive. I've checked to see if I'm "sharing" and I am as well. No difference.

Thanks.