It appears that using properly escaped URLs fails? For instance, this works: (notice the spaces in the URL!)

var coverArt = Titanium.UI.createImageView({
    width:'300px',
    height:'300px',
    top:'5px',
    defaultImage:'logo.png',
    image:'http://codefromjames.com/radio/library/Motion City Soundtrack/Commit this to Memory/folder.jpg'
});
Titanium.API.info(coverArt.image);
mainWindow.add(coverArt);

However, this does not seem to work.

var coverArt = Titanium.UI.createImageView({
    width:'300px',
    height:'300px',
    top:'5px',
    defaultImage:'logo.png',
    image:'http://codefromjames.com/radio/library/Motion%20City%20Soundtrack/Commit%20this%20to%20Memory/folder.jpg'
});
Titanium.API.info(coverArt.image);
mainWindow.add(coverArt);