diff -r 0d714a48ab53 -r 1d38f3605b20 mercurial/merge.py
--- a/mercurial/merge.py	Sun Aug 10 18:01:03 2008 -0500
+++ b/mercurial/merge.py	Sun Aug 10 21:55:06 2008 -0500
@@ -237,7 +237,7 @@
                     updated += 1
                 else:
                     merged += 1
-            util.set_flags(repo.wjoin(fd), flags)
+            util.set_flags(repo.wjoin(fd), 'l' in flags, 'x' in flags)
             if f != fd and move and util.lexists(repo.wjoin(f)):
                 repo.ui.debug(_("removing %s\n") % f)
                 os.unlink(repo.wjoin(f))
@@ -266,7 +266,7 @@
                 repo.ui.warn(" %s\n" % nf)
         elif m == "e": # exec
             flags = a[2]
-            util.set_flags(repo.wjoin(f), flags)
+            util.set_flags(repo.wjoin(f), 'l' in flags, 'x' in flags)
 
     return updated, merged, removed, unresolved