diff --git a/collects/compiler/bundle-dist.ss b/collects/compiler/bundle-dist.ss
index 7976dfb7df..f908b655d5 100644
--- a/collects/compiler/bundle-dist.ss
+++ b/collects/compiler/bundle-dist.ss
@@ -79,8 +79,8 @@
 			 "-mode" "555" 
 			 "-volname" (path->string
 				     (path-replace-suffix (file-name-from-path target) #""))
-			 "-srcfolder" (path->string (path->complete-path dir))
-			 (path->string (path->complete-path target)))])
+			 "-srcfolder" (path->string (expand-path (path->complete-path dir)))
+			 (path->string (expand-path (path->complete-path target))))])
 		((list-ref p 4) 'wait)
 		(unless (eq? ((list-ref p 4) 'status) 'done-ok)
 		  (error 'bundle-directory
diff --git a/collects/compiler/doc.txt b/collects/compiler/doc.txt
index eff8a72b46..5e569e7b20 100644
--- a/collects/compiler/doc.txt
+++ b/collects/compiler/doc.txt
@@ -681,12 +681,13 @@ it's a ".dmg" disk image; under Unix, it's a ".tgz" archive.
   a file extension is added automatcially (using the first result
   of `bundle-put-file-extension+style+filters').
 
-  By default, the created archive contains a directory with the same
-  name as `dir'. If `for-exe?' is true under Mac OS X, and if `dir'
-  contains a single file, then the created disk image contains just
-  the file.
+  The created archive contains a directory with the same name as `dir'
+  --- except under Mac OS X when `for-exe?' is true and `dir' contains
+  a single a single file or directory, in which case the created disk
+  image contains just the file or directory. The default for
+  `for-exe?' is #f.
 
-  Archive creation files if `dist-file' exists.
+  Archive creation fails if `dist-file' exists.
 
 > (bundle-put-file-extension+style+filters)