"if I can't use Picasa with my dng photos that would seriously impact its usefulness to me" is a bit puzzling me too indeed since you already use Lightroom. I do'nt use Lightroom but was thinking of it, and it would be interesting to know why one would still use Picasa when also having Lightroom. If you are using Picasa for a first viewing/selection (or elimination) of photos you might give Faststone a try. It has a "fast" option where it seems to show the embedded JPEG. You could also try the standalone DNG converter ( http://www.adobe.com/support/downloads/detail.jsp?ftpID=4576 ) on a small sample to try to find out whether the problem is with the DNG conversion in your Lightroom setup.