If you open a .dng as a Smart Object and then open the SO in Photoshop, Camera Raw will indicate that the file is a .dng.
Otherwise, the file should be converted to a .tif. After you work on the file in Photoshop and save it, check and see if it is a .tif file back in Lightroom.
I don't believe I'm opening it as a smart object. When I right click on the background, I'm given the opportunity to convert it to a smart object.
I was reluctant to click save on the .dng. I make a copy of the dng, then saved, and it did open up as a .tiff back in lightroom, without saving over the original it seems.
Just not certain as to what started this suddently.
Photoshop cannot process or save files as .dng except when the dng is opened as a Smart Object, and then Camera Raw is used to process the dng. After returning from Camera Raw the file cannot be saved as a dng. To see the choices of file type go to File>Save As and click the down arrow in the File Type box.
It would be interesting if you could provide a screen shot showing a dng open in Photoshop.
This is the normal process, a RAW file is processed by ACR in Photoshop when it is opened from Lightroom and the image window in Photoshop will show the name of the original file. See this image:
After you have edited and adjusted the image in Photoshop and select save when you are closing the image the file will be saved back to Lightroom in the file format and color space you have selected in your Lightroom preferences.
This is not an issue, this is normal LR -> Photoshop processing, it would only be opened in the file format you select, i.e. TIFF,or PSD, if Photoshop had a different version of ACR (lower) to Lightroom and Lightroom had to render the file before opening in PS.
Thanks. I suppose that might be my issue. I'd had a couple of update problems, so Photoshop had been running ACR 8. I finally got everything updated, so it seems it figured out that and started doing the .dng.
I appreciate the help everyone. Thanks!