Library management isn't Nook's strong suite... at all...
I LOVE it as a reading device, but library management leaves a lot to be desired.
I haven't had any problems with covers not showing up. That's the best I can say about it.
It doesn't pick up tags, like collections at all.
I don't have any problems with this, since I don't use my device as my library. I keep maybe 20 books at a time on it, so library organization isn't vital to me. But that's me! Others want to do things differently, and there is a "shelf" structure to use, but it's not automatic. And from what I have heard not completely reliable.