No thumbnail when node reference chosen via select

Thanks for pointing this out. The documentation is definitely a bit weak here... This has been changed/simplified a bit since earlier versions of this module. The image file field to use for a referenced content type is specified in the edit form of that content type. As long as there is at least one File field with a widget type of Image specified on your content type, you will have a new 'Nodereference Widget Thumbnail settings' with a drop down that allows you to select one such field to be utilized by the content type anywhere that is referenced as a nodereference field in other content types. I have attached an image to clarify. I will keep the issue open for a while or until I hear back from you that this makes sense.

Updated README.text on master branch.