--- a/hgext/largefiles/lfutil.py	Tue Nov 22 12:06:42 2011 -0600
+++ b/hgext/largefiles/lfutil.py	Tue Nov 22 19:52:23 2011 +0100
@@ -156,7 +156,7 @@
             hash = readstandin(repo, lfile)
             lfdirstate.normallookup(lfile)
             try:
-                if hash == hashfile(lfile):
+                if hash == hashfile(repo.wjoin(lfile)):
                     lfdirstate.normal(lfile)
             except OSError, err:
                 if err.errno != errno.ENOENT:

--- a/tests/test-largefiles.t	Tue Nov 22 12:06:42 2011 -0600
+++ b/tests/test-largefiles.t	Tue Nov 22 19:52:23 2011 +0100
@@ -257,6 +257,12 @@
   5 files updated, 0 files merged, 0 files removed, 0 files unresolved
   getting changed largefiles
   3 largefiles updated, 0 removed
+  $ hg debugstate --nodates
+  n 644         41 .hglf/sub/large4
+  n   0         -1 .hglf/sub2/large6
+  n   0         -1 .hglf/sub2/large7
+  n 644          9 normal3
+  n 644          9 sub/normal4
   $ cd ../b
   $ hg log --template '{rev}:{node|short}  {desc|firstline}\n'
   7:daea875e9014  add/edit more largefiles