ItFixed it for me - Picasa Thumbnails not matching images.

Here is another useful tip. If you are running Picasa and you find that the thumbnails icons are not matching the images most likely your database is corrupted. The most common way to repair this is to uninstall Picasa completely and then reinstall the software.

I have come across a manual method of repairing (rebuilding) the Picasa database.
The database file is the "Picasa2" folder located at one of the following locations.

For Vista: C:\Users\[useraccounthere]\Applciation Data\Local\Google

For XP: C:\Documents and Settings\[useraccounthere]\Local Settings\application data\google

Note you may have to show hidden files/folders in Windows Explorer to see the above folders.

To rebuild the data base you have to
  1. Shutdown Picasa.
  2. Then browse to the above location. I recommend renaming the "Picasa2Albums" and the "Picasa2" folder to something like "Picasa2Albums.saved" and "Picasa2.saved" in case you need to put the older database back.
  3. After that you can start Picasa and it will recreate the database files. I ran this on a pc with over 10,000 pics and it took under 1 hour to rebuild the database.

The above process should not affect any edits you made to your pictures or the pics themselves but as always its a good idea to take a backup of everything important to you just in case.

For backup tips see 7 Ways to Backup your data.

There are other ways to achieve this but ItFixed it for me.

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