A few tweaks made today - if you have all photos in an album set to private, and no album cover selected, the stock "folder" icon will be shown for the album, in your portfolio, instead of the first photo in the album.
So,
1) If you set a cover photo for an album, that photo will be used as the album image in your portfolio, regardless of the image's privacy settings.
2) if you do not set a cover photo for an album, the first public photo in that album will be used as the album image in your portfolio.
3) If you set do an image as an album cover for a public album, regardless of the photo's privacy settings, it will still be used for the album picture in your portfolio, and as the album cover within the album.
So, setting an image as an album or portfolio cover image overrides privacy settings, but the individual image will still not be listed in the album.
Also note - only public and password-protected albums are listed to visitors to your portfolio.
1) Password albums cannot be accessed by visitors without entering the password.
2) Private albums are only shown to you, and cannot be accessed even if the visitor has the direct URL to the album.
3) Public albums are available to anyone.
4) Private images are only visible to you.
5) Public images, within a private album, can be accessed by visitors if the user has the URL to the image page or image.