I would also like to do this... I have a lot of videos on an external hard drive which I connect to the xbox via USB. On the original xbox you could have an image file in the video folder which would display as the folder image in xbox media center - it doesn't seem the xbox 360 allows you to do this so easily.
The xbox 360 seems to have this capability as it can display an image and description for downloads, and the several videos which are already on hard drive have images associated with them.
Does anyone know this works on xbox 360 and how to create a media information file with an image and description?