I wish we could help out on that. As far as we know no iPod supports displaying Chapter names in Audiobooks.
One might intuit that the Part name will appear first, the Chapter name below that and the Author below that, but that's not the case. When you play an Audiobook Builder Part the iPod displays the Audiobook title first (as it does the Album), the Part name second (as if it were the Song) and the Author third (the Artist). For single-Part output the title and Part name are identical - which means the exact same text will appear in both the title and Part positions. As the iPod switches chapters it will display any change in artwork but the text will remain the same.
There is one way to see chapter names on the iPod - when the Audiobook is stored in a Podcast file instead of an Audiobook M4B file. The catch is the Chapter names are displayed immediately above the progress bar - not in the regular text area - and they're only visible while the user scrubs forward and backward (while the blue diamond progress mark is visible). That's useful for finding a specific Chapter but not ideal for at-a-glance progress checks. We've experimented with allowing Audiobook Builder to output each Audiobook in a Podcast file but haven't decided yet whether to include it in an official release. If you would like to see this in a future version of Audiobook Builder please let us know. Every voice counts!
Also, you mentioned screenshots showing Chapter names over the progress bar on the iPod. Can you point us to a place where we can view those screenshots? We're guessing they're of Podcast files, where the Chapter names are displayed immediately above the progress bar, but if we can see they're actually of Audiobook files then we'd love to do the research to determine how exactly that happened. We'll gladly eat crow at a table full of happy users
.