I've created a couple launchers - one for xterm and one for Terminal. No matter what is in the "working directory" box, the terminal session is always started in the root directory. Normal behavior would be for the terminal session to start in the user's home directory. Can't make that happen.
I'm running the Xfce spin of Fedora 16. I guessed the version of Xfce based on the library versions:
$ rpm -qa |grep -i xfce |grep lib
Created attachment 4390
Use the Path key of desktop files if a path is not set
The attached patch will use the Path key of desktop files if a working directory is not already set
Pushed to master: http://git.xfce.org/xfce/xfdesktop/commit/?id=8f89ae4bb60fe6b15e0a8eb5b31135fbdd6ca182