Get a program called KnownFolder Browser here--> http://weblogs.asp.net/kennykerr/archive/2006/11/02/Known-Folders-Browser-1.0-_2800_for-Vista-and-Beyond_2900_.aspx
and check to see that the relative path and the actual path to your AppData folder is NOT pointing to your desktop. The actual path should be something like..... C:\Users\XXXX\AppData\Roaming. Where XXXX represents your logon. To correct this, highlight the incorrect item, right-click and choose change path. From here you should select "Roaming" folder found under AppData, which is found under your logon name. Attached is a screen shot of this dialog box. Once you point the folder away from your desktop back to it's intended target all will be right with the world again.