Try this:
runmode hide
Image CONVERT=jpg HERE AS cover.jpg HEIGHT=128 WIDTH=128 PRESERVEASPECTRATIO
sync: attrib +H folder.jpg
Make sure the type is set to MS-DOS Batch Function so that the attrib command works.
I don't think there's a way to specify minimum width/height; the PRESERVEASPECTRATIO turns them into maximum width/height, while not using it means they're absolute width/height and the image may be distorted. You could send GPSoft a feature request as I imagine it would be easy to add. Double-check the documentation of the Image function first, though, as I may be forgetting something.
That's what the Buttons and Tutorials forums are for. Feel free to post there once you're happy with the button. There are also a bunch of buttons examples in my Getting to know... Tutorial.
Have a look at this thread and also the Folder Formats FAQ if you haven't already read it.