@geagle: I disagree. I do "ONLY" use FLAC files, and embedded art does not work, on my device.
I cannot say 100% that it does not work on any album, but it definitely was the reason why one fourth of my album art did not show up. Once converted back to Folder.jpg, it works like a charm. (Am just happy I did not earlier convert all my album art to embedded, as someone was recommending again and again on this thread a few weeks ago. I learned from it - not to naively trust what users say on this forum... Some of the advice one finds here is not so reliable... but of course some of it is very helpful.)
I have been experimenting with filenames and tags for a while now and have found a few good rules to make it work reliably. However everything works as long as you follow some guidelines. If you don't have a clean file system and tags, all further reports will be in vain.