iPhoto opens automatically by creating files on Desktop
Maybe the service is saved somewhere else? As far as I know, they go into ~/Library/Services/ (you can go there by switching to Finder and press Shift+Control+G or select "go to folder" in the Go-To-Menü). 

Maybe you saved your Automator script as "Folder Action"? Have you checked them, too? I think they are visible as a submenu when Control-Clicking on the Desktop.