The issue is gone for me, BUT I have to redo everything due to this issue.

If manually adding Artwork does save it in the correct place then any automated tagging should do the same.

If you can reproduce the creation of Artwork in the wrong place capture it in a debug log (step 4b): viewtopic.php?f=7&t=69

There are only minor fixes in the latest MediaMonkey 4 builds, so it this point I still assume something else is causing this (which is why if you can reproduce a debug log would be really useful in uncovering why this happens). It could be an Addon or another application that does this.

There are likely 2 parts to this. What created the Artworks and then how they got associated with the files. Scanning with scan for Artwork likely answers the second question, but I have no answer for the first question.

That is what should happen, and has happened in the past that way, yes. But that's obviously not was has been happening since the last update.
The artwork folder is a general folder in C:\Users\<username>\Music\Artwork (default music location is C:\Users\<username>\Music\, with a simple <artist>\<album> sorting).

I just tried to manually save artwork as a jpg instead of in a tag, and it created a jpg file directly in the <album> folder as expected.

Edit: I see that MediaMonkey 5 is very close to release now, so I guess I'll wait for the release to see if the bug is still present in that version. Until then I'll manually lookup the artwork.

What's the full Path of the Artwork folder?

MediaMonkey would save Artworks to the file folder (or embed) if it were to tag Artworks, not a generic Artwork folder with Artworks for many Albums. Any automated Artwork downloading would only happen if files have unknown Artwork.

Maybe I'm explaining it wrong because I don't really understand what is happening and English is not my first language, but no. That is not the case. I never stored any artwork there, let alone artwork from artists that I have never heard of. The artwork that is in that folder has been stored there by MM, and are the incorrectly replaced artworks.

Then it sounds like scanning picked up the Artworks with Scan file directories for Artwork enabled. Having this option disabled should not have the Artworks return in the future.

I can't check most of the files anymore as I've corrected them now, but I just saw that one album had slipped through my manual correction. From that album, some songs have the correct artwork and those are stored in the label as it should be.
The other songs have incorrect artwork, and on those songs the artwork curiously seems to be saved to a JPG file in completely different folder called Artwork. I always store artwork inside the labels and I know for sure that the songs had the correct artwork to begin with.

The question that hasn't been answered is if the Artwork is external Artwork (hover over the Artwork in the Properties > Artwork tab and the tooltip will show where it is stored). That may give a clue as how the Artworks got there in the first place.

If it shouldn't overwrite existing artwork, but it does in reality, I guess that's the bug that's being reported
And ofc the second thing is that the album art that has been looked up is incorrect (completely different artist and album, or not the front cover from the album). If album art was being replaced over and over again with correct album art, I don't think anyone would notice it.

Like I said in my first post here I've disabled both options for now and at least that prevents the wrong album art being saved, and I have removed the incorrect album art from the tags and manually added the correct album art, but that's only ofc from all the albums that I've noticed so far.

Neither setting would override existing Artwork. Scanning would add more Artwork additional to existing if you don't have a good Album folder structure and the lookup will only run when no Artwork is associated and only associate 1 Artwork.

It will probably help, but why is MM overwriting existing artwork with artwork from artists and albums that I have never even heard of when these options are enabled? As I understand it, MM should only try to lookup artwork when there is no artwork present.
It has worked for years that way as far as I know, so why has the behaviour suddenly changed?

Disable Scan file directories for Artwork under Tools > Options > Library. See if that stops Artwork from being added to your files.

Tools > Options > Metadata Lookup has an option to lookup Artwork, but this would only happen for files with unknown Artwork.

I'm glad that I'm not the only one with this issue. I have it with a lot of albums as well. Even after auto-labelling from the internet (Discogs db) with the correct album art, MM seems to overwrite the saved album art with completely the wrong album and artist, or with low quality artwork. I had 'lookup missing artwork' enabled, but the artwork is not missing from these tracks so I don't understand why MM is overwriting it. For now I have disabled the option, I hope that works.

For example: I just ripped the Ayreon album "Universal Migrator" to my NAS with the correct album art being saved inside both the tags and the folder, but as soon as I selected the ripped tracks to play, the album art that was saved was replaced with a completely different artist and album that are not even remotely related in name or title.
On other albums where it's at least the right album, instead of the album art, a picture of the CD itself is being used, or a promotional picture from the whole CD or LP package (or a mixture of the two, even within the same album) instead of just the album art.

MediaMonkey 4.1.31.1919. The only installed extensions are the Discogs tagger and the Dutch translation (both up-to-date).

I do not think so, I do not see any pictures in the folder being scanned and I only have one folder specified to be scanned. But I turned it off, let me see if this will fix the issue.

Are the Artworks external? If so, they're getting picked up on scanning if the option to scan file directories for Artwork is enabled under Tools > Options > Library.