PhishBucket

Apparently the settings don't necessarily help prevent 3rd parties from using photos. If I find out someone's using my images in ads and not just to plug into a fan page or app, I'll send FB bills for each occurrence. I may have taken the social networking plunge but I'll be damned if I'll let them use my likeness (or those of my family) for free! :)

After you select the Facebook Ads tab, you get this pop-up:

"Worried about privacy? Your photos are safe.

There have been misleading rumors recently about the use of your photos in ads. Don't believe them. These rumors were related to third-party applications, and not ads shown by Facebook. Get the whole story at the Facebook Blog, or check out the Help Center."... See More

I still closed that pop-up and continued with your instructions. The fact is, when I see ads with my friends' pictures, it's WHILE using third-party apps!