OK, ran the command from the xterm and the last line of the traceback is (at line 70 in main:
globals.albumcache = pygame.image.load(os.path.join(db.get_db_dir(), "album_cache.tga")).convert()
pygame.error: Couldn't open /home/user/MyDocs/.sounds/album_cache.tga

I looked there and sure enough its not there (DOH!). Thinking this gets created by the kagu-scanner I re-ran the scan program. The file is still not there.