perhaps it was different between 11 and 11.1, I don't remember, but the default location for coverart with 11.1 was \documents and settings\[user]\application data\J River\Media Center 11\Cover Art
It is essential that the art files follow the [artist] - [album].jpg naming template otherwise what follows will not work.
Move your coverart folder to wherever you would like it then gather your art files together in that directory.
upgrade.
Open MC's options > File location > cover art. Choose "in a specified folder", specify which folder, deselect the save inside file option. Press OK.
Select all tracks.
In the action window, open the tag window, click on the thumbnail stack to open the image window. right click on the image window and select 'remove coverart'
The image window should now say "No Image". Right click in the window and choose "Quick find in file/cover art directory" and MC will go through your cover art directory reconnecting the tracks with the art.
-marko.