Camera RAW works from windows but not from LightRoom, please help!

Sorry if unclear. Yes, there is a mismatch of ACR and Lightroom but resolving this may only be possible with a different version of Photoshop installed. You cannot mix and match: since each generation of ACR is restricted to work with a particular generation of PS. So the version of PS which you are using, is indirectly important here.

On the other hand, Lightroom can still operate fine, and also can successfully convert, save and submit rendered image files for editing in Photoshop (or other program), and then automatically import the results back again, and continue to work back and forth: even when there is no ACR whatever present on that computer.

LR contains all the needed tools for getting the Raw conversion you want, just the same as in ACR of a contemporary version (and if your LR is of a newer generation than your ACR, then LR offers a more up-to-date feature set / Process Version; this is where the compatibility issue comes in). Getting LR to render the image rather than ACR, sidesteps that incompatibility.

Once ACR is the same as or newer than LR, then since ACR can now understand everything LR might send its way, a different workflow becomes possible (and preferred). In that case LR does no conversion itself; it sends its Raw conversion instructions, plus a link to the related Raw file, to ACR. Which silently processes that (usually, without opening up any window for further user interaction) and displays the results directly into the PS working environment.

If you have been seeing an ACR window, while going from LR into PS, this may be because PS is set to open up incoming non-Raw images as well as Raw images, into ACR on the way. In that case it will in fact be a (LR-rendered) already converted bitmap which you are dealing with, not referring back to the Raw file itself.

• If what then opens into PS is titled with the name of a Raw file, then this is a Raw conversion newly made by ACR (on LR's instructions, by default) which is not as yet saved - and when that does happen, this will be seen to be in fact a a bitmap not a Raw.
• If what opens into PS, or into ACR if so configured, is titled with the name of a TIFF or PSD - then this a finished Raw conversion which has been generated by Lightroom and saved to disk already, having required no help from ACR to achieve that much. PS is being invoked for the sake of its layers and other bitmap editing tools and not for any sort of Raw conversion.
• Within ACR, one easy confirmation that you are dealing with a bitmap not a Raw, is that the Colour Temperature slider shows an arbitrary scale with 0 in the middle, rather than showing specific Kelvin degrees.

Rocket.1978  wrote Hello Akash, Thanks for replying so quickly. 1. Yes, I usually choose the option to "open anyway", however this simply opens the file directly into CS5 interface, it does not open via Adobe Camera Raw plug-in. So if I need to make any changes to the RAW file using Camera Raw (which I usually do) before CS5 it is unfortunately not a very helpful option. The only way I can get the file(s) to open into Camera Raw first is if I open them directly via Windows Explorer.

Never does the ACR plugin open when sending a file from LR to PS. All the RAW processing is done in LR, even it you didn't do any additional processing/editing in LR, and then sent to PS. If the first thing you do in PS is Save the file it will turn from being listed as a RAW file to the file type you have chosen in the External Editing tab of the LR preferences.