diff --git a/gtk2_ardour/editor_audio_import.cc b/gtk2_ardour/editor_audio_import.cc
index cf57261aa6..df737429bd 100644
--- a/gtk2_ardour/editor_audio_import.cc
+++ b/gtk2_ardour/editor_audio_import.cc
@@ -19,6 +19,7 @@
 
 #include <pbd/pthread_utils.h>
 #include <pbd/basename.h>
+#include <pbd/shortpath.h>
 
 #include <gtkmm2ext/choice.h>
 #include <gtkmm2ext/window_title.h>
@@ -380,7 +381,6 @@ Editor::embed_sndfile (vector<Glib::ustring> paths, bool split, bool multiple_fi
 				boost::shared_ptr<Source> s;
 
 				if ((s = session->source_by_path_and_channel (path, n)) == 0) {
-					cerr << "source doesn't exist yet\n";
 					source = boost::dynamic_pointer_cast<AudioFileSource> (SourceFactory::createReadable 
 											       (*session, path,  n,
 												(mode == ImportAsTapeTrack ? 
diff --git a/gtk2_ardour/editor_mouse.cc b/gtk2_ardour/editor_mouse.cc
index e9b71e4e85..356504d809 100644
--- a/gtk2_ardour/editor_mouse.cc
+++ b/gtk2_ardour/editor_mouse.cc
@@ -3381,6 +3381,8 @@ Editor::region_drag_finished_callback (ArdourCanvas::Item* item, GdkEvent* event
 
 			boost::shared_ptr<Playlist> to_playlist = rv->region()->playlist();
 
+			assert (to_playlist);
+
 			/* add the undo */
 
 			session->add_command (new MementoCommand<Playlist>(*to_playlist, &to_playlist->get_state(), 0));	
diff --git a/gtk2_ardour/selection.cc b/gtk2_ardour/selection.cc
index 2b1b522d12..1e8874444c 100644
--- a/gtk2_ardour/selection.cc
+++ b/gtk2_ardour/selection.cc
@@ -20,6 +20,7 @@
 #include <algorithm>
 #include <sigc++/bind.h>
 #include <pbd/error.h>
+#include <pbd/stacktrace.h>
 
 #include <ardour/playlist.h>
 
diff --git a/gtk2_ardour/utils.cc b/gtk2_ardour/utils.cc
index 9c1ef22a88..b4d02591e9 100644
--- a/gtk2_ardour/utils.cc
+++ b/gtk2_ardour/utils.cc
@@ -576,55 +576,4 @@ key_is_legal_for_numeric_entry (guint keyval)
 }
 
 
-ustring
-short_path (ustring path, uint32_t target_characters)
-{
-	ustring::size_type last_sep;
-	ustring::size_type len = path.length();
-	const char separator = '/';
-
-	if (len <= target_characters) {
-		return path;
-	}
-
-	if ((last_sep = path.find_last_of (separator)) == ustring::npos) {
-
-		/* just a filename, but its too long anyway */
-
-		if (target_characters > 3) {
-			return path.substr (0, target_characters - 3) + ustring ("...");
-		} else {
-			/* stupid caller, just hand back the whole thing */
-			return path;
-		}
-	}
-
-	if (len - last_sep >= target_characters) {
-
-		/* even the filename itself is too long */
-
-		if (target_characters > 3) {
-			return path.substr (last_sep+1, target_characters - 3) + ustring ("...");
-		} else {
-			/* stupid caller, just hand back the whole thing */
-			return path;
-		}
-	}
-	
-	uint32_t so_far = (len - last_sep);
-	uint32_t space_for = target_characters - so_far;
-
-	if (space_for >= 3) {
-		ustring res = "...";
-		res += path.substr (last_sep - space_for);
-		return res;
-	} else {
-		/* remove part of the end */
-		ustring res = "...";
-		res += path.substr (last_sep - space_for, len - last_sep + space_for - 3);
-		res += "...";
-		return res;
-		
-	}
-}
 
diff --git a/gtk2_ardour/utils.h b/gtk2_ardour/utils.h
index b95f09d243..7e26ba066c 100644
--- a/gtk2_ardour/utils.h
+++ b/gtk2_ardour/utils.h
@@ -81,6 +81,5 @@ static std::map<std::string, Glib::RefPtr<Gdk::Pixbuf> > xpm_map;
 const char* const *get_xpm_data (std::string path);
 std::string longest (std::vector<std::string>&);
 bool key_is_legal_for_numeric_entry (guint keyval);
-Glib::ustring short_path (Glib::ustring, uint32_t target_characters);
 
 #endif /* __ardour_gtk_utils_h__ */
diff --git a/libs/ardour/ardour/playlist.h b/libs/ardour/ardour/playlist.h
index 103e95929e..5f33719ae7 100644
--- a/libs/ardour/ardour/playlist.h
+++ b/libs/ardour/ardour/playlist.h
@@ -182,6 +182,7 @@ class Playlist : public PBD::StatefulDestructible, public boost::enable_shared_f
 	bool             save_on_thaw;
 	string           last_save_reason;
 	uint32_t         in_set_state;
+	bool             first_set_state;
 	bool            _hidden;
 	bool            _splicing;
 	bool            _nudging;
diff --git a/libs/ardour/audiofilesource.cc b/libs/ardour/audiofilesource.cc
index 9a3bf266ae..929cfc8083 100644
--- a/libs/ardour/audiofilesource.cc
+++ b/libs/ardour/audiofilesource.cc
@@ -29,11 +29,13 @@
 #include <pbd/pathscanner.h>
 #include <pbd/stl_delete.h>
 #include <pbd/strsplit.h>
+#include <pbd/shortpath.h>
 #include <pbd/enumwriter.h>
 
 #include <sndfile.h>
 
 #include <glibmm/miscutils.h>
+#include <glibmm/fileutils.h>
 
 #include <ardour/audiofilesource.h>
 #include <ardour/sndfile_helpers.h>
@@ -366,10 +368,33 @@ AudioFileSource::find (ustring& pathstr, bool must_exist, bool& isnew)
 
 	isnew = false;
 
-	/* clean up PATH:CHANNEL notation so that we are looking for the correct path */
+	/* i (paul) made a nasty design error by using ':' as a special character in
+	   Ardour 0.99 .. this hack tries to make things sort of work.
+	*/
 
 	if ((pos = pathstr.find_last_of (':')) != ustring::npos) {
-		pathstr = pathstr.substr (0, pos);
+		if (Glib::file_test (pathstr, Glib::FILE_TEST_EXISTS)) {
+			/* its a real file, no problem */
+			
+		} else {
+
+			if (must_exist) {
+
+				/* older session using file:channel syntax */
+				
+				warning << string_compose (_("This older session references an embedded\n\
+non-mono audio file:\n\n%1\n\n						\
+The session file may be edited or the file must be removed before it can be used."), 
+							   short_path (pathstr, 48))
+					<< endmsg;
+				return false;
+
+			} else {
+				
+				/* new derived file (e.g. for timefx) being created in a newer session */
+
+			}
+		}
 	}
 
 	if (pathstr[0] != '/') {
diff --git a/libs/ardour/playlist.cc b/libs/ardour/playlist.cc
index ae9e23fcc9..807bcd23ca 100644
--- a/libs/ardour/playlist.cc
+++ b/libs/ardour/playlist.cc
@@ -74,6 +74,7 @@ Playlist::Playlist (Session& sess, string nom, bool hide)
 	: _session (sess)
 {
 	init (hide);
+	first_set_state = false;
 	_name = nom;
 	
 }
@@ -108,6 +109,7 @@ Playlist::Playlist (boost::shared_ptr<const Playlist> other, string namestr, boo
 	_edit_mode = other->_edit_mode;
 
 	in_set_state = 0;
+	first_set_state = false;
 	in_flush = false;
 	in_partition = false;
 	subcnt = 0;
@@ -180,6 +182,7 @@ Playlist::Playlist (boost::shared_ptr<const Playlist> other, nframes_t start, nf
 	}
 	
 	in_set_state--;
+	first_set_state = false;
 
 	/* this constructor does NOT notify others (session) */
 }
@@ -220,6 +223,7 @@ Playlist::init (bool hide)
 	g_atomic_int_set (&ignore_state_changes, 0);
 	pending_modified = false;
 	pending_length = false;
+	first_set_state = true;
 	_refcnt = 0;
 	_hidden = hide;
 	_splicing = false;
@@ -508,10 +512,10 @@ Playlist::add_region_internal (boost::shared_ptr<Region> region, nframes_t posit
 		 old_length = _get_maximum_extent();
 	}
 
-	if (!in_set_state) {
+	if (!first_set_state) {
 		boost::shared_ptr<Playlist> foo (shared_from_this());
 		region->set_playlist (boost::weak_ptr<Playlist>(foo));
-	}
+	} 
 
 	region->set_position (position, this);
 
@@ -1418,7 +1422,7 @@ Playlist::set_state (const XMLNode& node)
 	}
 
 	in_set_state--;
-
+	first_set_state = false;
 	return 0;
 }
 
diff --git a/libs/ardour/session_time.cc b/libs/ardour/session_time.cc
index 2a921c3dc9..9ae3492ea7 100644
--- a/libs/ardour/session_time.cc
+++ b/libs/ardour/session_time.cc
@@ -25,6 +25,7 @@
 #include <ardour/timestamps.h>
 
 #include <pbd/error.h>
+#include <pbd/enumwriter.h>
 #include <pbd/stacktrace.h>
 
 #include <ardour/ardour.h>
diff --git a/libs/pbd/SConscript b/libs/pbd/SConscript
index 12664a1fca..3aaeb1bf1b 100644
--- a/libs/pbd/SConscript
+++ b/libs/pbd/SConscript
@@ -34,6 +34,7 @@ pathscanner.cc
 pool.cc
 pthread_utils.cc
 receiver.cc
+shortpath.cc
 stacktrace.cc
 stateful.cc
 strreplace.cc