I do have wifi access and confirmed it was connected. The scanner certainly appears to be pulling something down. And for #2 I have an 8gig SDHC card that has about 312 songs on it and I believe they all have tags. I guess it might be possible that there is a song or two that doesn't have tags.

I will run the scanner from the command line and see if it bombs out prior to finishing (?maybe it crashed and didn't write the file?)

OK, sure enough, kagu-scanner errors out with:
...line 257 in __load_image
image = pygame.image.load(self.art_path)
pygame.error:Unsupported image format