Here is a new twist to the problem with Corel Connect not showing thumbnails.
I have the paid download version of CorelDraw GS X5 installed on a PC running Windows Vista Ultimate 32-bit. I found that the Corel Graphics - Windows Shell Extension only shows in the CorelDraw installer when "Custom" is selected versus "Typical," even though the shell extension shows in Control Panel. The latest twist is that Corel Connect will show photo thumbnails on the hard drive, but will not show thumbnails for photos on a CD or DVD. Other than a different file structure, a DVD or CD is read only. If I copy a photo from a DVD to the C: drive, Corel Connect will show the thumbnail on C:. Windows Explorer shows the thumbnails on the hard drive, CD, or DVD. Corel Connect will not show thumbnails of the Corel .CDR files on the hard drive, CD, or DVD in Vista but it will show them in Win XP.
Why doesn't Corel Connect display .jpg thumbnails on a DVD or CD? I think there is a bug in the Corel Graphics - Windows Shell Extension in Windows Vista. It has been several years and Corel has yet to resolve it.