Hi Scott,
I am really sorry for the delay of this reply. It seems like you are using "thumbnail" as default layout of your showcase. Since thumbnail layout are meant to show blog image in thumbnail view, all the photos will get display no matter what is the settings set from the module. If you want to remove post cover, you must set either default or legacy layout for your showcase module,
http://screencast.com/t/pnltBeccZ9xW
Regarding on your "Readmore" issue, I've applied the fix inside your /modules/mod_easyblogshowcase/tmpl/thumbnails.php and it should be working correctly now.