Good to hear that you have found the solution to the problem, 
I guess the PSD files have some unknown issue that Cartoon Animator can't successfully read,
if your class needs the file to follow, may I suggest you send the PSD file or project to the technical support.

Technical Support: https://www.reallusion.com/CustomerSupport/UserEx/QForm.html

Hope you can have a great experience in Cartoon Animator.
Daniel
Reallusion

I'm not sure what happened but PSD files I created in my version of Photoshop suddenly worked with Cartoon Animator 4. The feature of auto updating edits for both software works just fine and I can also click+drag layers from sample PSD template files included with Cartoon Animator 4 into any newly created PSD project file in Adobe Photoshop CS 5.1. The PSD file that didn't work for me before came from the 2danimation101.com Udemy course.

Hi! I've just accessed the trial version of Cartoon Animator 4 to see whether it will work for me. Found a free tutorial on Udemy (2D Animation 101 Courses) and following it on importing and opening up a template PSD file. I found out I can't seem to drag+copy the layers on one PSD file unto another open blank PSD file that I have. I'm not sure what is the issue... but I have a hunch. Do I have a very old version of Photoshop that is not compatible with CA4? I'm using Adobe Photoshop CS 5.1 Extended. Is there a workaround? If not, may I know the oldest version (not yet CC) of Adobe Photoshop that CA4 is compatible with?

EDIT: I think I just realized the problem. The version of Photoshop I'm using does not have the functionality yet to copy-paste Folder Layers from one PSD file unto another. :-P I hope modifications I make in the PSD file will still carry over automatically to CA4 though... Will post update later on.