My folders seems to be showing just like in Finder. I can't think of what might cause yours not to work properly. You might ask on the Alfred forums and I bet the dev. there will help you.
I had a look in the forums and came across a posting where someone experiened the same thing because of permissions issues. This makes sense as the generic icons only show up for folders on a different drive than the boot drive. I'll have to look into this further.
That animated screenshot is an animated GIF file. It is basically a bunch of images played one after the other to make it look like animation. You just record your screen to a normal video file then use an app. to convert the video to a small animated GIF.
That's really cool! So you used a screen recording app (like Voila or Screenflow) then cropped it to only show the Alfred stuff? But which apps did you use to extract the frames and convert it to an animated GIF?
Stella: thanks for suggesting Launchbar. Looks good on the website and will try it out. Anything that helps me spend less time clicking and navigating the mouse all over the screen is welcome.