I am having a similar problem. It happens with asf files made a couple years ago and 160x120 format. Perhaps the format change makes the thumbnail impossible as the pixelization and lost frames caused by expanding a small video seems to make it happen. All other video seems to have no problem. The quality of the picture makes no difference on the 160x120 as I have 28kb encoded asf as well as 300kb. Both do not get a thumbnail but the files are encoded (albiet the small ones suck on expansion).

Hope this can be figured out. I would like to put up some 1000 of these small videos from 1997 to 2003 vintage.