The Dark Elf race is accepting Lamia's, Nereid's, Elves, and human portraits. On Version 3 (recent, I hope?)
Should be fixed in 0.3, but maybe you don't have it applied? After extracting a new version you have to go back in to mods and click apply, otherwise it'll keep using older code. Definitely don't see it with 0.4.
You do have to have some files with DarkElf in the path, if it can't find any DarkElf tagged portraits, it will choose any.