Yes that is exactly why this is happening, if the files themselves do not have any embedded artwork in their meta-data then the control panel is trying to source this from other locations as per your settings under the 'Albums' tab and it's grabbing the incorrect artwork (which usually happens).
In this case we would recommend de-activating any image sources in the 'Albums' section other than the 'Embedded (ID3/metadata)" option.
Would like to add that it is most important to have the correct metadata within your tracks to stand any chance of showing the proper album art.
Example for this would be: Jax Jones - Breathe (Incorrect) Jax Jones - Breathe (feat. Ina Wroldsen) (Correct)
If you take a look at the UK Top 40 http://www.bbc.co.uk/radio1/chart/singles you will have a better idea on how album art should show if you have everything correct.
Well, I've tried every album setting possible to resolve the problem, but the tracks without embedded artwork continue to pickup images from elsewhere. Some of the images they pick up aren't even in my media folder, so I don't know where they're coming from. Others are picking up album artwork from other tracks. I only have 1 image file in the media folder and that's for my logo, hoping that these tracks would pick that up instead, but they don't.
Okay, we've changed the album settings to only allow Embedded, followed by iTunes (many of our artists have tracks on iTunes). It seems to be picking up the iTunes imagery. We have Winamp and we've started checking all the embedded images for each track. Hopefully, that'll resolve it.