That's easy.......you're doing the wrong App!
the hints above were for creating/editing albums in the
PHOTO APP. You wre attempting to do this in the
IPHOTO APP.
The iPhoto App is a very recent addition to the App store, created by Apple as an "extension" of the Mac application of the same name. On the iPad, it will also load albums the same way the the original Photo App does. Confused? You should be! If Apple had anticipated that iPhoto would be ported to the IOS, (which I am sure they did), then they should have named the "Photo" App, that comes preloaded, a different name!
Within the PHOTO app, a screenshot of selecting some pics, after the top right arrow is clicked (please excuse if it's huge, I'm in bed on my iPad
):
View attachment 333152
Edit: just to be clear. Your albums will be created within the PHOTO App first using methods suggested in above posts. Then, when you open your IPHOTO App, you will see a progess bar across the screen,as your "iphoto library" is updated.
Hope that's clear.
your head must have been about ready to explode wondering why nothing was working quite as it should have.