Firmware 3.01.19 :
All movies within individual folders along with corresponing jpg image.
After extensive tests I can personally confirm that the thumbnails created by the WDTV live hub are of a lower quality due to the way the machine scales the thumbnails (this may have been proven before but I needed to find out for myself).
The only way around this is through a paint program like Photoshop and doing the scaling yourself, then saving and changing the extention with .thumb_00x00 (the zero’s should be replaced with corresponding xml thumb sizes).
Considering how many thumbs are created for each cover this would take a long time!.. If anyone has a automated script let me know!