Using Both Adobe Camera Raw and Lightroom
Adobe makes both Camera Raw and Lightroom so it's natural to compare the two. While they do have a lot in common there are differences, and those differences mean that Camera Raw and Lightroom don't always play well together.
The underlying technology between the two is in fact the same, although Adobe packages and releases them separately. When they release an update to one, they often update the other at the same time. As of this writing, the officially supported release of each are Camera Raw version 5.5 and Lightroom 2.5. Both were released on September 15, 2009 and both support the same list of camera models. Since then though, Adobe has released the beta version of Lightroom 3 that includes fundamental updates to algorithms used to demosaic raw images. These changes can result in improvements in image clarity and noise reduction not yet available in Camera Raw. By the time Lightroom 3 actually ships though, it's pretty much a given that the two will be back in parity with each other if not before. Adobe Labs often pre-releases beta versions of Camera Raw just as they recently did for Lightroom.
But even if you are using comparable versions of Camera Raw and Lightroom the updates you make in one may not be visible in the other. By default, both store image metadata in different, non-compatible ways.
Adobe Camera Raw gives users the choice between saving image settings in what is called the Camera Raw Database or in separate "sidecar" XMP files by image kept in the same folder and named the same as the image it contains settings for. The eXtensible Metadata Platform is an Adobe standard based on XML for semantically storing settings and other metadata in a transportable text-based format. If you keep your image data in the Camera Raw Database, you can pretty much ignore where the data gets kept since there's no visible queue as to where it lives. You adjust an image to tweak the white balance or exposure and those changes get saved when you save the image. But Camera Raw doesn't really write them to the raw image itself. In fact, it never updates your actual raw file. Instead, those settings changes get saved to a file internal to Camera Raw (the Camera Raw Database) and then re-applied when you next open that raw file. Even if you rename or move the raw file, Camera Raw remembers your changes since they are internally indexed based on the content of your image, not its name or location. This solution breaks down though if you copy that image to another computer since it will have its own installation of Adobe Camera Raw with its own Camera Raw Database that doesn't know anything about your copied image.
XMP sidecar files though have their own potential problems. The metadata for each image gets saved in its own XMP file named after the source image so if you rename that image you have to also rename the matching sidecar XMP file or else they will become orphaned. If you move that image to a different folder or computer, you have to move its XMP sidecar file too. You should also be aware that XMP files can't be written to read-only locations such as CD-ROM discs. In such situations Camera Raw will write your metadata changes to the Camera Raw Database no matter what your preference is.
Enabling XMP support in Adobe Camera Raw
Enabling XMP support in Adobe Lightroom
Lightroom too offers users a choice, but a slightly different one. Lightroom always writes your image metadata updates to its own internal catalog but gives you the choice of writing sidecar XMP files as well. Adobe Lightroom's catalog and Camera Raw Raw's Database are entirely separate so unless you have told each to use XMP sidecar files they have no way to share information. You'll be able to tell things are amiss since the appearance of images will change when you go between the two programs.
To prevent this and make sure both are using XMP sidecar files, go to Edit >> Preferences >> Camera Raw from within Photoshop, or Edit >> Camera Raw Preferences from within Adobe Bridge. Both take you to the same place. Make sure "Save image settings in" under the Genera section is set to "Sidecar ‘.xmp' files." Then start up Lightroom and go to Edit >> Catalog Settings and check the box for "Automatically write changes into XMP" on the Metadata tab. Lightroom always writes to the catalog itself so there just a simple checkbox for XMP rather than the dropdown list with either-or choices as in Camera Raw.
With XMP support enabled in both applications you should be able to make changes in one program and have them show in the other. Image previews when browsing in one program may not change instantaneously based on changes made in the other since they have to be regenerated just as they do for browsing in any one program.
It's odd that interoperability between Camera Raw and Lightroom via XMP isn't the default, but the fix is easy even if Adobe didn't do it for you out of the box.
Update: 11/10/2009 - Two readers have emailed me to point out something I should have mentioned. Another way to mitigate the issues described in this article is to convert your raw files to Adobe's DNG format. If you do, both Camera Raw and Lightroom can save the settings metadata changes directly to the DNG. DNG itself has pros and cons of course, but at least within an Adobe-centered workflow, it is something worth serious consideration. Right now, I don't convert to DNG since I shoot Nikon and Nikon loves to play proprietary tricks with their NEF raw file format. I want to make sure I always keep the original NEF, so creating DNG versions as well (or DNG files with embedded NEF versions) significantly increases storage requirements. For me at least, the moral is that original NEF raw files plus XMP sidecars take up less space than original NEF files plus DNG.