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The new functionality in Lightroom 2 for sending a copy of your photo to Photoshop CS3 as a smart object is a nice addition to the digital photo toolbox. However the workflow is a little different than may be expected.
After the copy appears in Photoshop, when you go to File > Save you will be presented with the Save As dialog. This has caused some confusion because it functions differently than when simply sending a non-smart object copy to Photoshop. The difference is this, when saving that smart object copy it is not automatically saved to the source folder nor is it automatically added to the catalog. Here's what you have to do: