
iPhoto Library Manager normally keeps the album list it display in the main window up to date whenever you make changes to the library using iPhoto, such as adding new photos or albums. However, there are a couple situations in which the album list will not update, no matter how many changes you make to the iPhoto library. This affects other applications that display the iPhoto library contents as well, such as iMovie, Mail, Pages, and others.
The root cause of this is a failure of iPhoto to update the AlbumData.xml file for the library. If this file is not updated by iPhoto, though, then iPhoto Library Manager may end up showing different library contents than iPhoto itself, because iPLM will be reading an out of date version of the file. Often when this is the case, iPhoto will write out an error message to the console reading something along the lines of "Could not move AlbumData.xml into proper place." You can check this on your machine by opening up the Console application, which is located in the Utilities folder within your main application folder.
This occurrence seems to be most common when the iPhoto library in question is stored on either a PC formatted disk, or a shared volume or NAS accessed via Windows file sharing (SMB), or even sometimes accessed using Apple's own file sharing (AFP). If possible, try either connecting the disk in question directly to your computer, or copying the library to a disk that is attached to your computer, and see if that copy of the library updates correctly. If it does, your network setup is mostly likely the cause of the problem.
One other thing you can try is to open up the library package and delete the AlbumData.xml file. Opening up the iPhoto library again should then cause iPhoto to generate a new copy of the file. This doesn't work as a permanent solution for everyone though - many will see the album list updated once just fine, but then will return to the same problem, with subsequent updates not being written out correctly by iPhoto.