steinburger1109 is probably right. I have finally gotten around to fiddling with the non-displaying album art on my E 100, and both resolution and dpi seem to affect what I get on screen.
How do you like the E 300? My E 100 was a gift a few years ago now, and despite several disparaging reviews, here and elsewhere, I find it very convenient, way nicer than the Nano, and very durable, despite some less than ideal usage.
If you haven't looked through the forums much, there are some useful links to iriver-related sites.