Issues Adding Photos Library to iMovie

Open your current Photos library and go to the Photos app Preferences and check the box to make the library your systems library. iMovie will only recognize the system library, and there can be only one system library at a time, so if you go back to an old library you will need to go to preferences and make it the system library.

-- Rich

Just an add-on to Rich's post: where is your Photos Library stored? The Photos Library in your Pictures folder is usually already the Sstem Photo Library. But if the library is on an external drive, the drive needs to be compatible with Photos to be able to use it as your System Photos Library: Move your Photos library to save space on your Mac - Apple Support

If you switch between system photo libraries, you may need to restart Photos and iMovie for the change to take effect. Occasionally I even needed to log off and on again.

I have attempted using "import media", but my Photos Library is greyed out so that I cannot select it.

"Import Media" is only working for files imported from folders in the Finder. It does not work for photo libraries. iMovie is using a reduced File Chooser Dialog, that does not show you the sidebar with the Media Browser like the "File > Open" dialog in other applications. It has its own Media Browser.