desktop icons not inherited from profile

I recently upgraded a Mandriva installation from 10.2 to 2006, bringing
KDE up to ver. 3.4.

Now, desktop icons setup in a profile do not seem to be inherited by
users in the profile.

For example, I checked KDEDIRS for a user:

kiosktool-kdedirs
/etc/kde-profile/ltsp-basic/

The following file exists to setup an icon for the telnet program:
/etc/kde-profile/ltsp-basic/share/apps/kdesktop/Desktop/Telnet.desktop

This file was created using kiosktool, and according to the KDE docs,
that's where the .desktop file should be
(http://www.kde.org/areas/sysadmin/startup.php)

The user's local {HOME}/Desktop/ does not seem to have anything that
would override that icon, but the icon does not appear. 

Any help would be appreciated.

Marc DeTrano