What do you mean by 'folder images'? By default I will get a single frame from the beginning of a movie. I can change the artwork for my video files, but only BEFORE the xbox looks at the file. I use itunes to do it - very easy and Zune doesn't have the ability. Once my xbox acknowledges the file the artwork cannot be changes as far as I know.
In other words I encode my movies first using handbrake, then I add metadata tags and artwork in itunes and then I will view it on my xbox (not media center).
This works pretty well, however I am here looking through this forum to find out if there is indeed a way to improve upon this. I would like to see descriptions or even genres as well as a way to change artwork after my xbox has already seen a file.