Version:           3.0.3 (using KDE 3.0.3)
Installed from:    SuSE
Compiler:          gcc version 3.2
OS:          Linux (i686) release 2.4.19-4GB

Here is an example of how I reproduce the behaviour.

Using konqueror as a file browser with a tree view, and looking at the root directory. All directories are shown with a + symbol next to them with "usr" and "var" the last two. Now expand "usr" - it doesn't matter how, e.g. click on the + symbol, or navigate with keyboard and use the '+' key or right arrow key.

Now collapse "usr" by using either the '-' key or left arrow; "usr" will collapse, and "var" will listed just below as you would expect. But, below the entry for "var", the remains of the expanded view of "usr" are still visible.

Note: collapsing the tree view using the mouse works OK.