Not sure if they're is a self or security feature I missed, but sync can only see the favorite, camera, screenshot, and download albums on my phone. I can find photos from other albums by using the photos tab but it is harder to find them as it is all pictures on my phone.
I could be completely wrong since I haven't tested it myself, but I believe when I first heard this feature announced, it was mentioned that this dialog is rendered by the system / GSF so it's possible that it's not actually something that can be changed, outside of the overflow menu unfortunately.