[pkscout]

I have selected the option, but it is not working. What am I doing wrong?As you can see, the above image I do not have in my Eminem/extrafanart folder but yet it appears at the very beginning of an Eminem song.

Try turning off the option at the bottom of the settings screen shot labeled "Use transparent background when no artist images found."  When AS first starts there are no images yet found, so it will show the background image for the artist that Kodi downloaded briefly before starting the slideshow.  If you uncheck the option I mentioned you'll get a blank screen until the slideshow starts.  

Can you please tell me/.. if I want only the local artist images stored in Artist name/extrafanart folder … which option to select? I do not want remote images to be displayed at all. Thank you. 

To have AS not download any remote images, you can go to SETTINGS > SLIDESHOW and set image priority to USE LOCAL IMAGES FIRST.  If a folder with images already exists, AS will use that and not download any artist images.  If you never want AS to download remote images at all (even if no local ones exist), go to SETTINGS > IMAGES and turn off DOWNLOAD IMAGES FROM FANART.TV and DOWNLOAD IMAGES FROM THEAUDIODB.COM.