nope no good. i'll try and be more specific with exactly what i'm doing.
running xdsl 0.2.1 off cd.
booting into desktop.
right click apps ---> tools ---> loopback install
installing to F partition, (loopback file of 500mb leaving approximately 100mb left on F) ----> standard install ----> autologin. (no net connection at all)
install completed
right click shutdown ---> reboot.
upon reboot i use the xbmc file browser. i find a file 'xdslfs' of 480mb on the root of F. no other files whatsoever created.
i do not have an apps folder on either E or F. if you think it matters, i can create app folders on E and F and then try reinstalling?