I misunderstood when you said it displays "none". I thought you weren't even seeing the contents of your folders. First, make sure you have the latest version. It supports photos and internet audio streams along with music and videos. One thing I'm not sure about is your version of Python. I haven't tried it with v2.7, only v2.6. I don't know if that makes a difference or not, but I know v3 does not work. Second, it mainly supports mp3s with limited support for wma, but if you're seeing your songs listed then they must be mp3s or wma. For HandBrake, I've had the best results with HandBrakeCLI. I use this command:
HandBrakeCLI -i origvid.avi -o convertedvid.m4v -O -r 29.97
The -O is important and the '-r 29.97' avoids rebuffering issues that some videos have.
Once you have the latest version, let me know if you still have problems.
I thought it would be good to share my progress with this little issue. Up until a few minutes ago I had been trying to get this working on a Windows XP box. I decided to try to get it to work on a Linux box. After about 5 minutes it is up and running without any problems. A big pain on Windows and easy as pie on Linux. BTW Ubuntu 10.04. Tomorrow I plan on changing the OS on the server to Ubuntu.
I tried it and so far the folders show up as empty sub folders.