I figured it out- needed to "Perform Script:Insert Picture" Thanks, Jim
Jim, glad you figured it out.
Something you an others may find useful: any iPhoto Library is a package - a special type of folder that looks like a file. You cannot navigate to it in normal open/save dialogs, but you can specify somewhere inside a package using a path in FileMaker. If you want to look inside a package in the Finder, right-click/control-click on it and choose "Show Package Contents", which will open a new window showing the folders and files inside the package.
Other items on a Mac that are packages:
and many more.