Mousepad version: 0.2.12 (Ubuntu Gutsy)

Steps to reproduce:

1. open mousepad on an empty file or just search for some existing word
   in an existing document. The following steps stand for an empty file.
2. enter the letter 'a' in successive lines like e.g.:

<begin document>

a
a
a
a

<end document>

3. Search/Replace.../
   Find what: a
   Replace with: b
4. Hit "Find and Replace" once
5. Hit "Yes" to replace first occurence
6. Witness how 'b' is added after 'a' but 'a' is not replaced, like e.g.:

ab
a
a
a

7. From there on replacing works and 'a' will be replaced by 'b'

Additional note:
It does not seem to be important where the cursor is
before starting the search. It always seems to effect the first
occurrence of the word.