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[The_Stevinator]

when you "link" the image it creates essentially a preview of the file inside your illy file. when you embedd it, it is actually in the file, and thus you can view everything properly in there.

if the color changes after you embedd it. for example in the photoshop file it as a 10% cyan, and in the illy it's a 22% cyan. you have a color management problem. check to make sure your profiles are the same in both programs, and try again.