How I Finally got thumbnails to work

Could you clarify exactly what this fixed for you?

I also use Twonky, but the behaviour I see agrees with one of the other posters on the Twonkyforum. Specifically, the Folder.jpg is not used to represent the folder, and rather than using the jpgs named for each video the Live is showing the Folder.jpg for every video in the folder. e.g.

Folder1

 ----->Folder2

 ----------->Folder.jpg

 ----------->video1.mkv

 ----------->video1.jpg

 ----------->video2.mkv

 ----------->video2.jpg

In the above, when viewing the contents of Folder1 there is no thumbnail for Folder2 and when viewing Folder2 both video1 and video2 have Folder.jpg as their thumbnail, not their individual images.