This is some interesting information I just found thru a google search & thought I would share it here. I also have the problem with windows hiding the "folder.jpg" file. After running the suggested .bat file, I now see the folder.jpg files. It is also interesting that most of my albums have a "folder.jpg" and a "AlbumArtSmall.jpg" as KingSparta referenced. Some of my albums have four total jpg files that were hidden. This is all new info to me, so just sharing.....
From a mp3car.com forum:
Windows also has a habbit of making the "folder.jpg" a hidden file. That can hinder the art showing up, or you even knowing, or being able to see if it is actually in the folder. (It will also prevent you from saving a newer version, as the file is hidden, and windows will not let most programs overwrite the file).
To fix this problem easily, open up a text editor, and place this line into it:
attrib -s -h -r f:\mp3\*.jpg /s
(change the path above in red, to your MP3 Root folder)
Then, save it as UnhideFiles.bat or what ever you want to call it.
Now double click that file, and it will remove the hidden attribute from any of the JPG's in that directory, and all subdirectories as well. For me it takes around 30 seconds for it to to go through my mp3 folder that has a little over 900 Albums in it.
Now, you might think that finding the cover art is a matter of googling and saving the images, which is a VERY daunting task, even for a small music collection. LUCKILY there is a FREE program called Album Cover Art Downloader that pretty much automates the process. It will scan your collection, locate what it thinks is the correct images, (you choose from a thumbnail list) and simply click "Set as cover" It will save the cover in a .png format, as well as a .jpg to the music folder. It goes a step further, and saves the image into the MP3 files themselves, using ID3 V2 tagging. (Although Road Runner does not get the images from the tags, many other programs do, and it's nice when taking the time to do all this, to make you music collection compatible with just about anything out there, including many portable players).