I'm having the same issue. I've setup up tons of sites and the naming convention is correct. This is a new 1.30.1 (full file set) install that I'm working on. The last site I just completed - I upgraded to 1.3.0.1 from 1.3.0 and and no issues with the images at all. I've checked the source code and it seems to be exactly the same as on the last site I did. When I check the properties on the "_LRG image popup (which is displaying the thumbnail) I see that it is pulling from the small image directory - images/category_name/image.jpg
My file structure in this instance is: images/braceclets/image.jpg
images/medium/bracelets/image_MED.jpg
images/large/bracelets/image_LRG.jpg
Now the product detail page is finding the medium image without a problem, so I'm wondering if there is a code issue with the pop-up file that I can't see.
The URL is <a href="http://www.mariazamudio.com/index.php">My site</a>