Fresh database this time, rescanned music and then tried a lookup of artist images. Added the Config log and a screenshot of the AudioScrobbler config screen.
As well as no images when using the AudioScrobbler configuration section. I've realised that the plugin isn't getting Artist images whilst actually using the LastFm plugin to stream my web stream.
Attached are logs whilst using Blue3Wide....tracks are being scrobbled to my account perfectly.
After your post (which is the same situation as mine (only artist images needed not album covers)...I had a think and I have solved the problem in both lastfm plugin and audioscrobbler config'.
In MP config go to Music->Now Playing and untick 'disable internet lookups for cover art', I had this button checked, as to me 'cover art' == album art which I already have excellent quality of for all my albums, perhaps the text could be changed to 'disable internet lookups for artist/album images' or a disclaimer below that says "this will not affect your files".
I ticked this option and suggest the disclaimer because of terrible experiences with Windows Media Player in the past where hours of trawling the web for high quality album art and OCD-levels of ID3 tagging is ruined in minutes by Media Player's aggressive id3 lookup (even ticking the options in WMP doesn't stop it from doing this sometimes).
Anyway, just a suggestion, hope it helps some people.