Is your music on a removable drive such as an SD card?
WMP12 displays the "blue note of boredom" in library view for all albums on removable media, even if album art is present in the folder (revealed as hidden jpg files in windows explorer).
WMP actually processes your album art, makes the file "folder.jpg", appends the art to each track file (mp3) in the album, displays the art in play mode, and even caches it to your internal / fixed drive (HDD or SSD).
It will display in library view if you move an album file to your fixed drive. But put the same album folder back in the removable drive and you are back to the blue note.
I hope this saves others from wasted hours trying fixes from the web for other album art issues.
Unless someone has a workaround, we can only wait in hope that an update to WMP will remove the discrimination against removable media.