I have persistent issues with MM5 handling of album art.
This seems a low quality area of MM5 based upon the ongoing number of issues raised here, and the number of fixes and re-fixes.

I did some testing today;

My settings:
MM5 version 2825
Image Location: Folder.jpg
First Image: Folder.jpg
Format for multiple images: Folder<Auto Number>.jpg

Issue #1: Replacement of existing image.
The album folder had an existing Folder.jpg and Folder_2.jpg
MM5 was choosing to display the Folder_2 image ... why??
Took "Lookup Image.." for the album as a whole
Obtained an image, and requested file name of Folder.jpg, with "Apply All Files" & "Replace Existing Image" both checked.
MM5 offered to delete Folder_2.jpg, and it did so.
===> MM5 deleted Folder.jpg, but created Folder_3.jpg
==> ie. MM5 ignored my explicit directive to "Replace Existing image", although it did delete the image I was attempting to replace

Issue #2: MM5 lists non-existent images.
While MM5 was closed I deleted the Folder.jpg from an album folder.
I started MM5, and examined Properties for the album.
==> The Artwork tab displayed a cached version of the deleted image ... not helpful IMO
It also displayed that there was tag version of the image.
I used the trash can to "delete" non-existent cache version.
===> MM5 crashed (ID: A14AA874) ... "Cannot read properties .." ... I seen this crash three times in this new release

Issue #3: MM5 restart option is mostly useless.
The crash offered to dispatch the bug to you, which I accepted.
It gave me option for Restart or Safe Restart
After a lengthy delay MM5 restarted
===> error msg: "Media Server could not start: Port xxx already in use
This always happens. MM5 leave something running at high CPU.
To get a restart I always have to resort to screwing around icon the Windows Task Manager to end MM processes