SolutionThe digital photo album feature of PowerPoint is great, but changes that you make should be made using the menu command Format > Photo Album. This brings up the Format Photo Album dialog box. All changes should be made here.
The above screen captures show what happens when you delete a picture right on the slide, rather than in the Format Photo Album dialog box. In that case, PowerPoint is still looking for the picture in the digital photo album, and when it can't find it, a text box is substituted as a place holder.