Good news! It's been one of the things I wanted added some time back. At least in my case, it's not perfect. The Find-as-you-type feature misses this folder:
Sigur Rós - Með suð í eyrum við spilum endalaust
When I search for "ros"
I hope that's enough info to recreate the issue and, hopefully, fix it.
Edit: Should've added the technical details.
I'm running Listary v3.50.727 on an XP SP3 box. The folder I'm browsing is located on my NAS box. I'm using SMB/CIFS/SAMBA to access that folder.