diff --git a/collects/setup/dirs.ss b/collects/setup/dirs.ss
index 3b8f12c92f..f6590e0e6a 100644
--- a/collects/setup/dirs.ss
+++ b/collects/setup/dirs.ss
@@ -10,8 +10,10 @@
   ;; best to do some minor normalization.  This is similar to what
   ;; "main-collects.ss" does.  Again, this makes mzscheme expand paths
   ;; that begin with `~'.
+  ;; Note: (expand-path (simplify-path P #f)) is bogus, if P is
+  ;; "./~foo" or "~foo/.."
   (define (system-path* what)
-    (expand-path (simplify-path (find-system-path what) #f)))
+    (simplify-path (expand-path (find-system-path what) #f)))
 
   ;; ----------------------------------------
   ;;  "collects"
diff --git a/collects/setup/main-collects.ss b/collects/setup/main-collects.ss
index 91dfa626c3..b4323c492b 100644
--- a/collects/setup/main-collects.ss
+++ b/collects/setup/main-collects.ss
@@ -23,8 +23,10 @@
   ;; fine: getting rid of `.' and `..' (simplify-path) and collapsing
   ;; `//' to `/' (expand-path).  Using `expand-path' also expands `~'
   ;; and `~user', but this should not be a problem in practice.
+  ;; Note: (expand-path (simplify-path P)) is bogus, if P is "./~foo"
+  ;; or "~foo/.."
   (define (simplify-bytes-path bytes)
-    (path->bytes (expand-path (simplify-path (bytes->path bytes)))))
+    (path->bytes (simplify-path (expand-path (bytes->path bytes)))))
   ;; on Windows, turn backslashes to forward slashes
   (define simplify-path*
     (if (eq? 'windows (system-type))