Version:           3.5.4 (using KDE 3.5.4, Debian Package 4:3.5.4-3 (testing/unstable))
Compiler:          Target: i486-linux-gnu
OS:                Linux (i686) release 2.6.17.9-slh-smp-1

I often edit .desktop files with kedit - so I have assigned .desktop files to  kedit so I have it in the "open with" menu. Nonetheless every .desktop file still opens the application it represents and not the editor when I simply click on it. As it is meant to be. 

But applications:/ and settings:/ does not work anymore. When I try to start a module/application from it the only thing that happens is that the .desktop file opens in kedit. I would expect that all applications' .desktop files behave the same way (starting the application they stand for) no matter from which location they are called (and no matter what application is assigned to the file type .desktop file).