Created attachment 3394 Patch This simple patch adds two lines from older xfce to handle full paths.
Thanks for spotting and reporting this issue. It has been fixed in master and the xfce-4.8 branch. There will be a new stable release of xfdesktop soon. commit 9deadf72511e025543c36f0180b8f8b1112635b7 Author: Jannis Pohlmann <jannis@xfce.org> Date: Tue Jan 25 02:37:08 2011 +0100 Support absolute icon paths in desktop files (bug #7160). The patch was provided by xaizek@gmail.com.