diff -r 7e30f5f2285f -r 0776a6cababe hgext/largefiles/overrides.py
--- a/hgext/largefiles/overrides.py	Thu Feb 09 16:50:19 2012 -0600
+++ b/hgext/largefiles/overrides.py	Thu Feb 09 17:04:17 2012 -0600
@@ -319,7 +319,7 @@
                 processed.append((standin, "g", p2.flags(standin)))
             else:
                 processed.append((standin, "r"))
-        elif m == "m" and lfutil.standin(f) in p1 and f in p2:
+        elif m == "g" and lfutil.standin(f) in p1 and f in p2:
             # Case 2: largefile in the working copy, normal file in
             # the second parent
             standin = lfutil.standin(f)