diff -r cc383142e738 -r e574207e3bcd mercurial/localrepo.py
--- a/mercurial/localrepo.py	Wed Mar 30 20:02:17 2011 -0700
+++ b/mercurial/localrepo.py	Wed Mar 30 20:03:05 2011 -0700
@@ -1928,7 +1928,7 @@
     return a
 
 def instance(ui, path, create):
-    return localrepository(ui, util.drop_scheme('file', path), create)
+    return localrepository(ui, urlmod.localpath(path), create)
 
 def islocal(path):
     return True