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Valid for Sitecore 5.3
  Internal links issue

If you rename or move the /sitecore/content/Home item in the master database the internal links will point to "/". This will happen when users insert internal links via the Insert Sitecore Link button in the RAD editor and when the internal links are inserted in XSLT (for example: <a href="{sc:path(.)}">link</a>, no matter what the current item is, the link will point to "/").

To resolve this issue you should set the "contentStartItem" property of your "shell" site to "/" in web.config file.