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This is just one more in a series of reports about strangeness working with legacy files. The best advice seems to be don't open legacy files directly in CS5, but instead export to .inx or .idml from the original version, then work with that.
That said, there were some early bugs in Packaging, I think, in CS5, having to do with sertain characters in the path names of the links. Are you patched to 7.0.4? Those bugs were definitely squashed.
Hi Peter. Thanks for taking the trouble to reply. I'm actually on 7.5 (so CS 5.5, aplogies for the incorrect version in my above post). So I think I'm as up to date as I can be.
To be honest I'm not surprised that the only diagnosis is 'strangeness' - (I'll keep playing with idml's in the hope I can get round this) but my whole CS upgrade experience from CS4 (which was rock solid really) has been terrible. Having trouble working with legacy files and effectively loosing the ability to package files has become a nightmare in InDesign. (There's other issues as well - there seems to be lot's of weirdness with masterpages etc etc). Not being able to collect images for a postcard is one thing - not being able to do it with 120pp catalogues is quite another!
I'm going to think very carefully about the next upgrade from Adobe - (I've even had to switch back to Photoshop CS4 because of a serious unresolved bug in that.)
The current patch for CS5.5 is 7.5.2...
Look at the file paths. If they are extremely long, or nested too many folders deep, that may be the problem. Also look for any characters that are not alphanumeric, hyphen or underscore in a file or folder name.
Exporting the edited files to .idml might work, but the track record is much better if you do it first thing after opening a legacy file, and better still if you do the export from the lecgacy application and open that instead. I wish I could tell you something different, but I've not seen any better suggestions.