"I am trying run "Analyze Audio" on a folder which contains FLAC files, analyzer is asking me to select files. My reason for selecting folder is that when add new files it should analyze them automatically, but I am not having any luck, Please advise the correct way? Replay Gain article is suggesting to "select Audio Mode" I am not sure where is this audio mode and how to select it?"
If I understand the question correctly, go to Tools>Options>Library & Folders>Auto-Import>....Configure auto-import....
Add folders you want MC to "watch" and select the type of files to watch for. I check all boxes, make sure you check "Analyze audio for audio files". Sometimes it takes some time for this to happen, but usually within a few minutes if you have just added a folder or two to the "watched" folder. It takes longer if you build thumbnails, get cover art, etc. but it will happen.
Also, make sure all files in the folder(s) are not read-only and you have proper permissions otherwise MC cannot tag or otherwise modify them.
If correcting varying playback volume is your main objective I would only run Volume Leveling and not Replay Gain. This will greatly reduce reaching for the volume control between tracks (unless you want to turn it UP!).
Hope this helps.