They are in thumbnail view, and only 4 out of 40 show the album art. I know that some of the folders I have now I certainly do have the art on my computer because I can see it in the lib. But for some odd reason they decided to stop appearing on their own.

Sounds strange. I never encountered that problem, but anyways:

Right-click on the folder and choose properties. Now press customize and then choose picture. Double click on picture and press apply and then OK

Normally that would work but when I click on choose picture, there is no picture to choose. The only way that I can see the art is if I go into my library in LW and click on it. Other than that I havent been able to find them stored any where else on my computer. Any ideas?????

Highlight one of them in the library and press explore. Then the folder containing the albumart should open. It has to be somewhere, because the Limewire library is just an index for things you have downloaded to your computer.