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The low resolution message is merely a warning that the resulting print, book psge, calendar page, etc. may not have the best quality. I've printed books with photos of low resolution and the results were very acceptible. It all depends on the size of the print. For example, a low resolution photo on a 5 photo book page will probably look better than if the photo is placed on a full page photo. For a photo book, the size of the book may also matter.
The only way I know how to modify an existing photo to eliminate the low resolution message is to increase the size of the photo with photo editing software prior to uploading to Shutterfly.
Here's an example of a 8x8 photo book:
Notice the resolution message on the left page with the 800x600 photo size. The photo on the right does not have the resolution message even though it is the same photo, but it was resized to 1200x900 with photo editing software on my computer. Not shown is that, when I put the 800x600 photo on a page with 4 images per page, I did not get the low resolution message. Finally, be aware that resizing the photo does introduce some image degradation which may or may not be an issue.