Hi Allison,
We have never encountered the problem. Nor someone else has reported it. However, a search on "Can't read dir of lost+found" provides a lot of information on the problem and how to fix it. It seems to be a permission problem with the lost+found directory. ModelRight does not explicitly search that directory or any other, it just queries against the INFORMARION_SCHEMA. It appears that MySQL, however, needs read access to that directory (and possible others). For instance, see more details here: http://bugs.mysql.com/bug.php?id=15851
It sounds like one way to solve the problem is to do a "chmod +r lost+found" or to upgrade to a version where the problem is fixed. Either way, please post if you have found a fix, for the benefit of other users.
Hope this helps.
ModelRight Evangelist