Know this is an old thread, but thought I'd post here in case it helps someone out in the future.
I had the same issue. Turns out that you need to have the layer name and alias name the same for it to give you the photo field drop down option.
We have sde datasets, so the layername would be similar to DataBase.DBO.layername, in the map, we didn't like the extra info so renamed them (or tried setting alias in sde) to just the layername. No joy, the photo field disappears and had to keep the names the same in order for this feature to work.
R_