The following is as how I was able to resolve the issue:

1. Rename "old" ~/.config/kvirc into ~/.config/KVIrc
2. Create ~/.config/kvirc file (file, not folder) as follows:

$ ls -l ~/.config/kvirc
-rw------- 1 luser luser 76 Nov 29 17:34 /home/luser/.config/kvirc

$ cat ~/.config/kvirc
[Main]
LocalKvircDirectory=/home/luser/.config/KVIrc/
SourcesDate=538312962


The bug stands though as something really does not work right in the setup 
wizard.

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