From Wendy Russell,
Your Guide to Presentation Software.
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Solution

When moving pictures around in your PowerPoint digital photo album, you must do so using the Format Photo Album dialog box. If you move pictures from slide to slide, the next time you use the Update button, additional, unwanted text boxes will be added where the pictures once were.

1. Choose Format > Photo Album from the menu.
   
   
2. Select the picture to move.
   
   
3. Use the arrow keys, under the picture list, to move the picture either up or down.
   
   
4. Click the Update button to apply the changes.

Note - Reordering pictures in the digital photo album is not the same thing as reordering slides in the photo album. If you change the order of the slides in the photo album, by dragging to a new location, the picture listings will update themselves in the Format Photo Album dialog box. Reordering pictures on the slides must be done in the Format Photo Album dialog box.