Distro: Feisty Kubuntu, patched up to date.
Longer summary:
If you click the button (tool button) when viewing the properties of a file, or in the edit file types dialog within konqueror, or within the kde file types settings dialog, if you change the 'name' of the .desktop file, it removes the association, and dissappears! The problem is that its not clear that you're renaming the .desktop file, and the disappearing causes all sorts of strange behavior (depending on the association which just vanished), and also kde doesnt seem to realise that its been renamed, so it doesnt rebuild its menus or something. Either way, it appears to vanish - and recreating it behaves oddly too.
To illustrate this, here is an example of how to reproduce. Lets say Joe User has installed a tool called SOMETOOL and he'd like to associate them with ms-windows executables.
1. Find a ms-windows executable (ie, a file compiled with mono or an installer or something)
2. Edit the file's properties (right click, properties) then choose Edit File Type (the little tool button)
3. Application Preference Order lists the applications to use. User clicks ADD and types in SOMETOOL. He clicks ok. It adds SOMETOOL at the top.
4. (Here's where it messes up). User decides he doesnt like seing SOMETOOL in the list and would prefer that it showed up as "Some Useful Tool" when he right clicks to open the file. So the user selects SOMETOOL from the application preference order dialog and clicks 'edit'
5. The dialog that pops up is actually editing the desktop file. This is not really all that clear. The user sees SOMETOOL in the edit box, so he assumes that controls the name displayed to him. So he changes that to "Some Useful Tool" and clicks "OK". Then closes all the dialogs and assumes it worked. KDE says "updating system settings"
---> Unbeknownst to the user, kde has renamed the desktop file to "Some Useful Tool.desktop" without updating its cache or whatever. This means that the file type has disappeared from the "open with" dialog! In fact, in some cases, I've seen it remove ALL file types from that mimetype, having overridden them! This has led to "unknown mimetype - application/octet-stream" which is a rather serious issue.
---> The file type has also disappeared from the properties and associations dialog if you right click on the file and choose properties -> edit file type. Its just GONE.
---> If you try to add the same file type again, it will call it something like SOMETOOL-2 and other wierd things can happen. It will leave the renamed filetype in your desktop .hidden folder. Rebooting causes other behavior.
Once when I did this, it wiped my application/executable mimetype (or something similar) and applications like amarok would pop up hundreds of dialogs about missing mimetype at launch time. Very irritating. to fix it, I had to go to kde's mimetype editor and manually create application/octet-stream or whatever, to restore it. This happened without me ever deleting any mimetypes.
Thank you for filing this bug. I can confirm that clicking the edit button in that dialog pops up the properties for the .desktop file, which is confusing. I think that what you should be editing is the Name field in the Application tab.
Marking low priority since this is a somewhat hidden feature/problem that's easy to avoid.
You should file a bug about this upstream at bugs.kde.org.