Things work just a little differently now with the WMA audiobook to iPhone/iPod transfer.
I uninstalled and reinstalled the OverDrive Media Console software before beginning. I had also updated iTunes and installed the newest software (iOS 5) on the iPod Touch the week previously.
Check out, download, and start the transfer from the OverDrive Media Console as usual. Make sure your iPhone/iPod is plugged into your computer, iTunes is running and your device is recognized by iTunes before starting the transfer with the OverDrive Media Console.
The transfer will place the WMA audiobook directly onto your iPhone/iPod and into its own playlist. You should see the author listed as the name of the new playlist. (Note: This title will not be added to iTunes. It bypasses iTunes and lands directly on your device.)
The file is already marked as an audiobook and should resume playback and not be shuffled into your music.
Find the audiobook under your iPod's playlists, not in the music or audiobook folder.