Lol, a lot of people have thought Johan and even Johna before now!!!!
Not sure if it helps but I don't run my DC games from sub-folders so you could try that to see if it works?
If it does, then its just a matter of finding the correct variable for the argument (rather than use %ITEM_NAME%)
I'm sure Pieter added sub-folder support but I don't use it.
EDIT:
Just noticed, not sure if LoadDefaultImage=01 should be LoadDefaultImage=1 (no zero)
EDIT:
Lol, just fired up my cab and whilst it DID work on there before its decided to be a bitch and stop working ffs.
I have made loads of changes (frontends, emus, configs etc) since the last time I actually played a DC game so "somewhere" along the way I have screwed it up!
I'll do some testing with but I know the reicast core in RetroArch is pretty mature so that might be an option if I can't get NullDC working again.