Hi,
it looks like the new media manager still is a bit buggy. I uploaded a large amount of pictures into different folders and one inside the main folder of the article I currently edited. I then tried to set the image in the "root directory" as my post cover but was unable to select it. I then closed the composer and re-opened my article again. When I tried adding a post cover from the media manager again, I was presented with the view attached. Some pictures left their folder I uploaded them to and are no in the "root directory".
Cheers,
Chris