Under auto import I have "build thumbnails" selected. I've rescanned.
Under Tools->Options->File Locations->Cover Art it is set for Audio mode: In the same folder as the file (as folder.jpg).
It sounds like you've done it right, but I'm not 100% sure, as I store all of my cover art inside the files. From what I can gather, these two things *might* help you:
1. Under Tools > Options > Library & Folders > Configure auto import > Tasks > Get Cover art . Switching this to ON might grab your cover art of folder.jpg from the directory with the songs. If that's not ON, I don't think MC looks for cover art anywhere except in the file. But I'm not sure.
2. Tools > Cover Art > Quick Find in File / Cover Art directory . If you select some files and run this, it looks to me like it's going to look in the file tag *and* in the directory you have configured for cover art. Since you have it set to "same as audio file", I think it will pick up your folder.jpg.
If #2 works on a few files, I'm pretty sure you can run it on the whole library (maybe try a hundred or so first?) and pick up all of the cover art.
You also might consider the option to write the art into the files themselves. That way the art is really tied to the songs both for JRiver, future migrations to other JRiver platforms, and/or other players.
Good luck.
Brian.