In skinning %L means album so my guess is it is something to do with the album.

I can't reproduce...

During "Auto-tag from Amazon", if I deselect all tracks and then click [Auto-Organize] (to just download the album art), it asks me if I "want to overwrite %L.jpg?". I click yes, but no jpg file appears in the albums folder, nor can I find any file called %L.jpg in any folders.

Or does %L.jpg translate to some other filename in some other folder?