Try the following:
for /f "usebackq delims==" %I in (`dir /b /s ^| findstr folder.jpg`) do copy "%I" "%~pIcover.jpg"
Decoder Ring:
usebackq :: run the command in the backquotes and use the output as the input for the loop
delims== :: use the equal sign as a delimeter. Really you could use any character that isn't valid in a file name
dir /b /s :: do a recursive directory listing only outputting the bare file names
^| :: ^ escapes the pipe character, the pipe - well pipes the output from the first command to the second
findstr :: searches the input for matching lines, and only outputs them
%~pI :: the tilde p instructs the variable expansion to only output the path rather than full file name + path. Note, this includes a trailing \
, !