I dont know how the avic reads cover art, but here is what i did and every album i have shows artwork and prior to doing this almost no art would show up.
Itunes keeps the album art seperate from the mp3 files. I embedded all my cover art into the mp3's using a program called mp3tag. If you do a google search for embedding album art you will find tutorials.
Try embedding art into a couple of albums and see if that doesnt fix your problem.