Liquify Tool Question..

When I try to use the liquify tool, first the image is upside down when loaded into the box. Then when I try to liquify and move it shows the move how it should be if the picture was in the right position.

Ex. I'm trying to mess with someones face and it puts their shirt in the face area because it should be the other way around. I tried to rotate the image and it still doesn't work.

Help.

Also, this is a fresh install of PS 7 and then with the update added. I had to wipe my hard drive and then reinstalled. Thanks.

Paul