Imported Photoshop Files Don't Update

In CS3 I right-click on an imported layer and choose Update from the pop-up
menu. It shows the layer and says 1 of 1 items needs to be updated and the item
is checked. I click the Update button and it says 0 of 1 items updated.

This is what always happens. I've never been able to get the update feature to
work with any PSD file since CS3 first came out.. Has anyone gotten this to
work?

David Salahi