Just as collections are used to organize folders with common content, you can create labels (special Picasa-only folders) to group similar filesregardless of their location on disk. Although a folder can be in only one collection, an image file can be in as many label folders as you want. Adding a picture to a label doesn't move it from its folder on your hard disk. Files in a label are simply shortcuts to the originals rather than the actual files. As such, removing a file from a label doesn't delete it.
Create labels. You can create as many labels as you like. After creating the first label, Picasa creates a Labels collection in which all labels are stored.
Select the images for this label, adding them to the Picture Tray. (To include images from multiple folders, click Hold after selecting images from each folder.)
Type a name and select a date for the new label. (The date can be when the label was created or when the pictures were shot, for example.) If you like, you can enter information regarding where the pictures were taken and a description.
Click OK to add the new label to the Labels collection.
Add pictures to a label. To add new pictures to an existing label, select their thumbnails, click the Label button, and choose the label from the pop-up menu.
You can also add a picture to an existing label by right-clicking its thumbnail in the Library or its picture in Edit View. Then choose a label from the pop-up menu that appears.
You can right-click a thumbnail…
…or right-click an open picture.
Remove pictures from a label. If you later want to remove a picture from a label, select the label in the Folders List. Then select the image's thumbnail, and choose File > Remove from Label or press . Confirm the Deletion by clicking Yes in the dialog box that appears. Note that removing an image from a label does not delete its file; it just breaks the association between it and the label.
Delete a label. To delete a label you no longer need, select the label in the Folders List. Choose Label > Delete or press . Confirm the Deletion by clicking Yes in the dialog box that appears. (Note that deleting a label does not delete its files or remove them from their normal Picasa or Windows folders.)