To run the example all i did was copy the liblame.jar and liblame.xml files to my b4a additional libraries folder - no other additional files are required.
I created a 30 second 44100Hz stereo .wav file using Audacity, a saw tooth waveform with some noise.
Named it file_to_encode.wav and added it to the example project's Files folder.
Now i tested the example project on my Moto G (KitKit).
No 'object not initialized' error, file_to_encode.wav was successfully encoded to .mp3 and then decoded back to a new .wav file.
The Moto G has no external memory card slot, it has only it's 'built in' 16GB external memory.
Next i tested the example project on my old ZTE Blade (Gingerbread).
The results were the same but the Blade took an age to encode and decode with it's 600Mhz single core CPU!
The Blade has an external 4GB memory card installed.
You can download the .wav file i used for testing here:
http://b4a.martinpearman.co.uk/temp/file_to_encode.wav, can you test with my .wav file?
Can you also post again with details of the device(s) you're testing with, what device(s) and what version(s) of android?
Martin.