Comment 90 for bug 260492

I hit the exact same problem when performing clean 9.10 Karmic install preserving my home directory. I had 7.04, 8.04, 8.10 and 9.04 clean installations before with no problems. Double-clicking folders on the desktop would open them implying there was an application registered for folder mime type. The places menu entries however did not work as per this bug report. Had to right-click on a folder, select "open with another program..." and then to pick nautilus as default application to open "this and other files of type "folder" to fix this issue.

I am not sure if the problem occurred right after install or after tracker installation and removal (and then I have manually removed ~/.config/tracker file as well). It may worth to look at tracker app as a potential source of a problem, as it was installed on earlier versions of Ubuntu by default, and is supposed to index files and folders so it could possibly affect mimetype list somehow.

Having said that, I never had a problem like this until upgrading to Karmic.