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I'm running Photoshop CC 2015.5.1 (OSX) and when I paste graphics from Illustrator into Photoshop and choose Smart Object from the dialog, the smart object disappears from the layer stack and appears in the library panel. However, the object is still behind other layers but seems un-selectable in the layers.

What's the deal?! Is there a setting I can use to change this un-good behavior?

Thanks!

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Save your work and quit Photoshop. Reload Photoshop and you'll be able to convert your layers to Smart Objects.

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