I FINALY got XBM to behave properly with album art and my metadata!!!!!! It only took me 15 hours of experimenting to get it to work (totally lost a day :angry: ).
Let's cover what didn't work: Copying the files via file explorer (I have an SD card so I tried copying the files with the card in the phone and taking it out and copying files to it via my SD card reader), or the windows phone app, or the windows phone program. All of them in the end, XBM would just hork the Album Art or the meta data.
In a last ditch effort I again tried "Windows Media Player" (WMP). And low and behold everything went over properly.
One couple of things I found along the way: You have to organize your music on your PC this way: \Music\<Artists>\<Album>\<Songs> if by chance you get an <Album> outside the <Artists> directory/folder, and sync with WMP the Album art will be blank or wrong.
In WMP, make sure everything every thing is the way you want it. If you had to make changes to an album, song, make sure you do a right click on the album and select "Update album info" to commit the changes. (you might want to Bing how to manage your collection with WMP).
After that, and I made sure XBM had updated it's own database to be blank, reconnected the phone to my PC and started WMP and used it to sync/copy my music to the phone. Another thing I noticed this time, that with WP8.1 and the new XBM, when syncing with WMP, it no longer re-transcodes my music to a lower bit rate like it did before. It just does a straight copy.
When all the files are copied over, close WMP, disconnect the phone, REBOOT the phone, then start XBM and let it scan for new files. Depending on how big your collection is, it may take awhile, but when it say's it's "done" start browsing your collection in XBM and be patient. Even though XBM say's it's done, it still has to do some house keeping to display the lists.
But I am still completely dumbfounded that good old WMP sync'd everything properly, and that new Windows Phone App/Program couldn't.
By chance, if something still isn't showing properly in XBM. Delete the songs in XBM on the phone, and again make sure XBM doesn't show them before proceeding. Then go back to WMP, make changes, then re-sync just those songs.
Give it a try...
P.S.
I you have lock screen password, turn it off before you start the sync process on a large collection. Because when the screen locks, it will lock out and block the connection and you will get errors.