diff -r 7698c275aa56 -r de9eb6b1da4f mercurial/localrepo.py
--- a/mercurial/localrepo.py	Fri Jul 01 18:13:48 2011 +0200
+++ b/mercurial/localrepo.py	Fri Jul 01 17:37:09 2011 +0200
@@ -1985,7 +1985,7 @@
     return os.path.join(base, name.replace('journal', 'undo', 1))
 
 def instance(ui, path, create):
-    return localrepository(ui, util.localpath(path), create)
+    return localrepository(ui, util.urllocalpath(path), create)
 
 def islocal(path):
     return True