diff -r a281981e2033 -r e880433a2e00 mercurial/localrepo.py
--- a/mercurial/localrepo.py	Mon Apr 04 22:51:10 2011 +0300
+++ b/mercurial/localrepo.py	Mon Apr 11 21:44:22 2011 +0300
@@ -1233,14 +1233,15 @@
             modified, added, clean = [], [], []
             for fn in mf2:
                 if fn in mf1:
-                    if (mf1.flags(fn) != mf2.flags(fn) or
-                        (mf1[fn] != mf2[fn] and
-                         (mf2[fn] or ctx1[fn].cmp(ctx2[fn])))):
+                    if (fn not in deleted and
+                        (mf1.flags(fn) != mf2.flags(fn) or
+                         (mf1[fn] != mf2[fn] and
+                          (mf2[fn] or ctx1[fn].cmp(ctx2[fn]))))):
                         modified.append(fn)
                     elif listclean:
                         clean.append(fn)
                     del mf1[fn]
-                else:
+                elif fn not in deleted:
                     added.append(fn)
             removed = mf1.keys()