I should have said that it isn't working going from LR to CS6. They aren't talking to each other.
I can make photomerge work in CS6.
Since you seem very confident of your abilities using Lightroom and Photoshop, and you have done the only thing I would have suggested, it looks like you'll have to do some troubleshooting on your own. Can you possibly open all the images in Photoshop and then start Photomerge from within Photoshop and utilize the opened images. Yes, it is a workaround. Just a suggestion in case you are facing a deadline.
Thanks. That's what I tried and it does work. So the problem is to figure out why Photoshop won't respond to LR. It's really convenient working from LR as much as possible.
To add a note of humility I' not an expert but just wanted to clarify I'm not using PS elements, which is all I saw referred to in the online search.