All the library operations, like showing the "album" view, operate over the Windows Search indexer. It gets the metadata information from the file, using the registered property handler for that file type. The out-of-the-box handlers should cover all the common media cases just as in Vista.
If the WMP library works the same as in XP/Vista, it'll be as follows:
It's step 3 that always fails for me. Which would mean that the file's metadata wouldn't ever get up to date, which would mean that the Libraries wouldn't be able to pivot on that data. The only way of fixing it that I see is getting Windows Media Player fixed, but I'm sort of giving up on that, since nobody else seems to have this problem.