[Milhouse]

I thought the add-on authors were team-xbmc members so that's why I'm surprised that it uses a different naming convention.

It's not so much different, it's one of the supported naming conventions. It just so happens that the library export uses the other naming convention (the one least likely to cause problems). And the author has only coded up the more restrictive (but also easier to code) convention, and presumably it's the convention he uses so he's happy - he's under no obligation to support both, though of course it would be nice!

My movies are all in individual folders. The duplicate image filenames are different. The original kodi exported ones are filename-fanart.jpg and the new ones are fanart.jpg

That's why you can't use AD with "Use local files" enabled if you have multiple movies per folder - I'm pretty sure this has been pointed out at least a dozen times throughout this thread.

EDIT: I just checked one of the movies and it is still using the old image. It seems the artwork downloader downloaded a new fanart to disk but did not update the url in the database

I suspect you didn't have "Overwrite all existing artwork" enabled - without this option AD will not update the database with the new url when a url already exists in the database. So by enabling "Use local files" you've dumped a load of fanart.jpg files into your file system, but because you already had artwork defined in the database they're not being used. You're probably quite lucky, as you can now just delete all the fanart.jpg files you don't need and no major harm done.

If you want to update your local artwork, you'll need to disable "Use local files" and enable "Overwrite all existing artwork", then run AD. Once AD is finished, you can export your library which will write the now compressed and lower quality artwork from the texture cache into your file system with filenames that include the moviename prefix (although I'm not entirely sure what "Export" does if an artwork file already exists - will it overwrite? Let us know). Of course your library will still be referencing the remote artwork, which will only be fixed when you re-scan your library from scratch, so simply exporting the library won't cause your library to start using the local artwork.

However if you want to convert the now remote artwork that AD has found into local files by downloading the original quality artwork, then you might want to consider using mklocal.py (see thread in my sig) - it's admittedly more complicated to run than AD as it's a command line script, but it will download the original quality artwork, supports both filenaming conventions, and will associate your library with any type of local artwork you care to mention (discart, clearart, logo etc. etc.).