I recently purchased some space from SkyDrive and then moved the 'My Pictures' location on my PC to reside within SkyDrive (RIght Click -> Properties -> Location Tab). This synced nearly 50GB of photos to SkyDrive; however, now the 'Pictures from SkyDrive' album no longer appears on my Phone in the Pictures Hub. Only the Camera Roll, Saved, and Albums from Facebook show up.
If you log into your skydrive on your computer, do the folders have a photo folder icon (or show up when you click photos)?
Dude, you are awesome! I didn't know you had to change the folder type (or how to do so). Strange that I had to since I just merged it with the existing 'Pictures' folder on SkyDrive, don't know that the average person will know to do this - then again, the average person probably isn't going to be moving their My Pictures library to SkyDrive.