Blender not recognizing a PSD

So im trying to load in a PSD in a way described by Jonathan Williamson in his BlenderCookie tutorial about low poly game asset creation.

Im trying to just load in a PSD to view it on my model. Blender refuses to acknowledge it. It can see other PSDs the file is definitely in the directory, but it wont load. Ive tried saving it, closing photoshop, restarting blender, but it wont notice the file at all. Ive even moved the file into other directories but Blender still doesnt see it.

Why is this?