I'm not going to pretend I know exactly what's happening, but I have some suggestions from what I do to update jpg cover images, which I do a lot, because I like to make my own.
To start, turn off the hub using the remote Power button (don't unplug it or do a hard power down on the unit - it needs to be in standby so you can access it from computer).
From the computer, access the Hub drive. Then
First, get rid of any .metathumb type files, if any, in the directories where you are having issues. My experience is that these files act as sort of trump cards and cause some unexpected results. (Any that you want to keep, for movies that you did find online "content" for example, rename them jpg files ... it's what they are anyway, with metathumb extensions. )
Second, be sure your jpgs have exactly the same name before the jpg extension as your your movie files. They are case sensitive and easy to mess up especially when you make them yourself. Use copy and paste from the video file rather than retyping the names.
Third, go to the WD thumbs folder in your WD drive here: [wd drive] .wd_tv/thumbs. DELETE everything in that folder. Don't worry, items there will be quickly recreated by the device when needed from your jpg files.
Fourth, turn on your WD using the power button on the remote. BEFORE DOING ANYTHING ELSE, use the RESTART function from the WD interface here: SETUP/System/Device Restart (note: Restart, not "Reset").
When restarted, see if it's fixed. You can do this with "Media Library" on, but you might have to give it a few minutes to re-compile the folders and images. You can also check this right away with Media Library off, or selecting "folder view" or whatever that option is the WD sometimes offers when you first try to open videos and the media library is being compiled.
Hope this helps, let me know.