When you are choosing photos for a project, and get a message like the one below, it means that the high resolution version of some photos have been lost due to hardware failures in the past, even though smaller, thumbnail versions of those photos may still be visible in the system. So you may be looking at a photo that appears fine, but in fact its original high resolution copy has been lost. The tool will detect the missing photos and will notify you with a message like the one below.
If you want to use those particular photos in your project, the only recourse is to upload them again.
Upon uploading a photo to Snapfish, we store a high resolution version in the Snapfish cloud, but also several thumbnail versions of each photo in different sizes. When you later view that photo in your library or when creating a project, you're in fact viewing thumbnails and not the original, high resolution photos.