diff -r 32601b0b74c0 -r 652e07debf10 mercurial/subrepo.py
--- a/mercurial/subrepo.py	Sat Mar 08 19:02:39 2014 +1100
+++ b/mercurial/subrepo.py	Tue May 27 17:41:20 2014 -0700
@@ -277,8 +277,7 @@
     parent = repo
     while util.safehasattr(parent, '_subparent'):
         parent = parent._subparent
-    p = parent.root.rstrip(os.sep)
-    return repo.root[len(p) + 1:]
+    return repo.root[len(pathutil.normasprefix(parent.root)):]
 
 def subrelpath(sub):
     """return path to this subrepo as seen from outermost repo"""
@@ -315,17 +314,19 @@
     if abort:
         raise util.Abort(_("default path for subrepository not found"))
 
-def _sanitize(ui, path):
-    def v(arg, dirname, names):
+def _sanitize(ui, path, ignore):
+    for dirname, dirs, names in os.walk(path):
+        for i, d in enumerate(dirs):
+            if d.lower() == ignore:
+                del dirs[i]
+                break
         if os.path.basename(dirname).lower() != '.hg':
-            return
+            continue
         for f in names:
             if f.lower() == 'hgrc':
-                ui.warn(
-                    _("warning: removing potentially hostile .hg/hgrc in '%s'")
-                      % path)
+                ui.warn(_("warning: removing potentially hostile 'hgrc' "
+                          "in '%s'\n") % dirname)
                 os.unlink(os.path.join(dirname, f))
-    os.walk(path, v, None)
 
 def subrepo(ctx, path):
     """return instance of the right subrepo class for subrepo in path"""
@@ -1059,7 +1060,7 @@
         # update to a directory which has since been deleted and recreated.
         args.append('%s@%s' % (state[0], state[1]))
         status, err = self._svncommand(args, failok=True)
-        _sanitize(self._ui, self._path)
+        _sanitize(self._ui, self._ctx._repo.wjoin(self._path), '.svn')
         if not re.search('Checked out revision [0-9]+.', status):
             if ('is already a working copy for a different URL' in err
                 and (self._wcchanged()[:2] == (False, False))):
@@ -1352,7 +1353,7 @@
                 self._gitcommand(['reset', 'HEAD'])
                 cmd.append('-f')
             self._gitcommand(cmd + args)
-            _sanitize(self._ui, self._path)
+            _sanitize(self._ui, self._abspath, '.git')
 
         def rawcheckout():
             # no branch to checkout, check it out with no branch
@@ -1401,6 +1402,7 @@
             if tracking[remote] != self._gitcurrentbranch():
                 checkout([tracking[remote]])
             self._gitcommand(['merge', '--ff', remote])
+            _sanitize(self._ui, self._abspath, '.git')
         else:
             # a real merge would be required, just checkout the revision
             rawcheckout()
@@ -1436,7 +1438,7 @@
                 self.get(state) # fast forward merge
             elif base != self._state[1]:
                 self._gitcommand(['merge', '--no-commit', revision])
-            _sanitize(self._ui, self._path)
+            _sanitize(self._ui, self._abspath, '.git')
 
         if self.dirty():
             if self._gitstate() != revision: