Ahh ha! I often run apps I'm testing from the Windows temporary directory. Well, I've found the very first one that won't work right if you do .. it finds all the video files, but none of the audio. Anyway, I moved it to the desktop and, voila, now it finds everything.
Kinda weird it doesn't work from %temp%, but heck, it doesn't need to. Strange XP-sp1 bug, I guess.
Now, I wonder about the Cancel button which still doesn't work...