I'm on Windows 7 Ultimate.
I've gone through the whole process of double checking regedit for the correct default. And restarted my computer for extra measure. All is correct there.
I cannot associate any photo files with photoshop as a default. I tried both setting default programs...photoshop even when reached through BROWSE does not become an option. And I cannot FILE ASSOCIATE because photoshop is not on the list.
This only started with the update yesterday.
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