- BACKUP your library before you start. You undoubtedly will need to restore.
- Album loss seems to be associated with moving an album into a folder that contains other albums. I think this only occurs if the album was created prior to iPhoto 5, or if the album has not resided in a folder yet. The answer? Create an empty dummy folder. Move the album into the dummy folder first, then move the album to the final folder you want it in. Once the album is moved into the dummy folder, I think some meta-data gets added tothe album and it's now safe to move.
- If you move an album into a folder, make sure it's in the folder before you do anything else! If you can't see the album in the folder, hit Undo (Command-Z) right away, and you will get your album back. If this happens, try the trick in step two before you try dragging it again.
First, how it happens: I'm not sure why this happens, but I do know when it happens. The conditions are: a folder with at least one album already in it, and another album being added -- and as noted, that album has not previously been in a folder, and must have been created in iPhoto4. The reason I was getting spotty results last night was due to how I was dropping the albums:
When I drop an album as shown on the left side of the above image, it will vanish (assuming it meets the above conditions). When I drop an album as shown on the right side, it works 100% of the time -- even for albums that should vanish according to the above rules. So, the easiest workaround is: always drop dragged albums onto the containing folder, not into the hierarchy of albums within the folder! Once it's been placed once, you can then drag it around inside the folder to place it.]

