Not really a bug.
More like : this website is quite old. (despite/reason bc of being affiliated to NovelUpdates)
So, yeah.....
Go open the image and "save as JPEG" or something.
(Its a pain i know and for a bunch of other stuff like sharing reddit or video from danbooru and more)
It is a bug, because when you are uploading a cover image after creating the story (the edit page) you are told WEBP isn’t allowed, and it doesn’t let you even select WEBP images for an upload.
On the initial story creation page, if you click “Choose a file” for your cover, it lets you choose a WEBP cover image, and doesn’t give any error messages (though there are probably internal errors). Everything goes through perfectly. Except the image doesn’t appear, and you have to upload the image through the story edit page.
Because the two things are the exact same action, both of them should follow the same rule.