okay, I think I figured out what's wrong with that option in both this and the sample loader mod I made. Thanks for testing. I'll have to see if I can find time tonight to fix and recompile tonight (hopefully)
Anyway, as far as having the games show up in the DM(L) folder configuration, use this
http://www.mediafire.com/download/or1fc1cs2c4umul/Devolution - dummy files.zip
IIRC you just use the included INI files and then run the included java app on your games folder and it will do all the work for you (including cover copying) and then, yes, you just add a |58 on the end of the arguments= to get those specific desired options (and when I recompile the plugin for you it should pay attention to that last one correctly)
If you run the "Devo Prep" in the "Devo Plugin Prep" folder it'll do what you're looking for (create a dummy file in the same folder as every game.iso in your games folder ... with the right name for that game)
You can probably ignore the "Shared Plugin Prep" folder ... We'll just keep this simple.
If there's any GC games you don't want to show up in WiiFlow in the Devo plugin, just delete the .GC file from it's folder when you're done.