I've tweaked the XSLT to show a link to files for non image media instead of a broken image. I've also converted the original filename to lowercase as images uploaded as .JPG were not returning thumbnails:

<xsl:variable name="thumbnail" select="concat(substring-before(Exslt.ExsltStrings:lowercase($file), concat('.', Exslt.ExsltStrings:lowercase(umbracoExtension))), '_thumb.jpg')"/>

        <xsl:if test="position() &lt;= $mediaItemsToShow">
            <xsl:choose>
            <xsl:when test="umbracoExtension='gif' or umbracoExtension='jpg' or umbracoExtension='png' or umbracoExtension='jpeg'">
            <a href="/umbraco/editMedia.aspx?id={@id}" title="{@nodeName} (Click to edit)" style="float:left; width:100px; display:block; margin:0 5px 5px 0;">
                <img style="-webkit-box-shadow:0 1px 2px rgba(0,0,0,0.3);-mox-box-shadow:0 1px 2px rgba(0,0,0,0.3);box-shadow:0 1px 2px rgba(0,0,0,0.3);" src="{$thumbnail}" alt="{@nodeName}" width="100"/>
            </a>
            </xsl:when>
            <xsl:otherwise>
                <a href="/umbraco/editMedia.aspx?id={@id}" title="{@nodeName} (Click to edit)" style="float:left; width:100px; display:block; margin:0 5px 5px 0;">
                    <xsl:value-of select="@nodeName" /> (File type: <xsl:value-of select="umbracoExtension" />)
            </a>
            </xsl:otherwise>
            </xsl:choose>
        </xsl:if>