I was having this same issue on my galaxy s. After flashing to cm9 it wouldn't download anymore. I went back to stock for a short period of time and figured it would work then but it didn't. Finally upgraded to the Galaxy s3, and figured that would fix the problem, but it didn't. I still can't download on the s3. When I long press on the album art it shows the loading symbol for a little bit and then stops, but it never shows any downloaded art to select. I'm thinking I might downgrade to an older version of Poweramp and see if that fixes the issue.