Hi Marnie,
A good rule of thumb is to put your photo into a picture box in Photobook Desginer. If it comes up with a cross at the bottom, then it's under 200 dpi.
You can do one of a few things.
1. Drop it into a smaller picture box until the cross no longer appears.
2. If it's a scanned photo, then scan it at a higher resolution. Most scanners have a default setting, which is less than 300 dpi. You need to manually change this. 600 dpi is good for printing a photo at twice it's original size.
3. If it's an emailed photo, then see if the sender can send you a higher quality version (not reduced).
4. If you have no choice and really want the photo in your book. Then preview the current page, or the whole book (at high resolution) and look at the affected photo/s. If it looks jittery or pixelated, then it will print this way. If it looks fine, then it will most likely print fine.
If you hold your mouse over the thumbnail, then the size should appear at the bottom. If it's under 500kbs and not mbs, then you have a fairly small image to begin with.