The file indicates your desktop directory is set to your home directory. To fix 
this, change the line
XDG_DESKTOP_DIR="$HOME/"
to
XDG_DESKTOP_DIR="$HOME/Desktop"

** Changed in: nautilus (Ubuntu)
       Status: Incomplete => Invalid

-- 
nautilus desktop shows home directory not ~/Desktop
https://bugs.launchpad.net/bugs/445477
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