Comment 1 for bug 174532

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Daniel Hahler (blueyed) wrote : Re: My Desktop has the root directory (/) After upgrade from Gutsy to Hardy

Confirmed.
The workaround worked for me, too.
Please note that there has been the correct path already been displayed before and that you should say "no" when being asked for moving the files. Maybe just changing the some dialog element back and forth and then clicking Apply would have helped already.
I'm guessing that it comes from kubuntu-default-settings. Please re-assign the package, if you know it better.