After upgrading Lubuntu from 12.04 to 12.10, lubuntu-desktop fails to load. In particular, lxession dies with the following errors to run.log:

Code:
** Message: utils.vala:79: Config system location : /etc/xdg/xdg-LXDE/lxsession/LXDE
** Message: utils.vala:79: Config system location : /etc/xdg/lxsession/LXDE
** Message: utils.vala:85: System system path location : /etc/xdg/lxsession/LXDE/desktop.conf
** Message: utils.vala:89: Final file used : /etc/xdg/lxsession/LXDE/desktop.conf
** Message: utils.vala:79: Config system location : /etc/xdg/xdg-LXDE/lxsession/LXDE
** Message: utils.vala:79: Config system location : /etc/xdg/lxsession/LXDE
** Message: utils.vala:85: System system path location : /etc/xdg/lxsession/LXDE/desktop.conf
** Message: utils.vala:89: Final file used : /etc/xdg/lxsession/LXDE/desktop.conf
** Message: settings.vala:252: Key file does not have key 'window_manager/program'
** Message: settings.vala:261: Key file does not have key 'window_manager/session'
** Message: settings.vala:270: Key file does not have key 'window_manager/extras'
** Message: settings.vala:291: Key file does not have key 'panel/program'
** Message: settings.vala:301: Key file does not have key 'screensaver/program'
** Message: settings.vala:311: Key file does not have key 'power-manager/program'
** Message: settings.vala:341: Key file does not have key 'file-manager/program'
** Message: settings.vala:351: Key file does not have key 'polkit'
** Message: settings.vala:361: Key file does not have key 'network_gui'
** Message: settings.vala:371: Key file does not have key 'audio_manager'
** Message: settings.vala:381: Key file does not have key 'quit_manager'
** Message: settings.vala:391: Key file does not have key 'workspace_manager'
** Message: settings.vala:401: Key file does not have key 'launcher_manager'
** Message: settings.vala:411: Key file does not have key 'terminal_manager'
** Message: settings.vala:421: Key file does not have key 'clipboard'
** Message: settings.vala:431: Key file does not have key 'disable_autostart'
** Message: settings.vala:441: Key file does not have group 'State'
** Message: settings.vala:451: Key file does not have group 'Dbus'
** Message: settings.vala:460: Key file does not have group 'Dbus'
** Message: settings.vala:506: Key file does not have group 'Keymap'
** Message: settings.vala:527: Key file does not have group 'XRandr'

** (lxsession:2219): WARNING **: settings.vala:537: Key file does not have group 'Security'

** (lxsession:2219): WARNING **: settings.vala:611: Key file does not have key 'iXft/Hinting'

** (lxsession:2219): WARNING **: settings.vala:619: Key file does not have key 'sXft/HintStyle'

** (lxsession:2219): WARNING **: settings.vala:627: Key file does not have key 'sXft/RGBA'

** (lxsession:2219): WARNING **: settings.vala:635: Key file does not have key 'sGtk/ColorScheme'

** (lxsession:2219): WARNING **: settings.vala:643: Key file does not have key 'sGtk/CursorThemeName'

** (lxsession:2219): WARNING **: settings.vala:651: Key file does not have key 'iGtk/ToolbarIconSize'

** (lxsession:2219): WARNING **: settings.vala:659: Key file does not have key 'iNet/EnableEventSounds'

** (lxsession:2219): WARNING **: settings.vala:667: Key file does not have key 'iNet/EnableInputFeedbackSounds'

** (lxsession:2219): WARNING **: settings.vala:719: Key file does not have key 'Beep'
** Message: settings.vala:185: Monitoring: /etc/xdg/lxsession/LXDE/desktop.conf
** Message: settings.vala:193: Desktop file is not in config home, monitoring creation of it
** Message: settings.vala:208: Monitoring home path: /home/user/.config/lxsession/LXDE/desktop.conf
** Message: options.vala:154: Create build-in Clipboard
** Message: utils.vala:79: Config system location : /etc/xdg/xdg-LXDE/lxsession/LXDE
** Message: utils.vala:79: Config system location : /etc/xdg/lxsession/LXDE
** Message: utils.vala:85: System system path location : /etc/xdg/lxsession/LXDE/conffiles.conf
** Message: utils.vala:89: Final file used : /etc/xdg/lxsession/LXDE/conffiles.conf
** Message: utils.vala:79: Config system location : /etc/xdg/xdg-LXDE/lxsession/LXDE
** Message: utils.vala:79: Config system location : /etc/xdg/lxsession/LXDE
** Message: utils.vala:85: System system path location : /etc/xdg/lxsession/LXDE/desktop.conf
** Message: utils.vala:89: Final file used : /etc/xdg/lxsession/LXDE/desktop.conf
** Message: app.vala:59: Launching openbox-lxde (null) (null)
** Message: utils.vala:79: Config system location : /etc/xdg/xdg-LXDE/lxsession/LXDE
** Message: utils.vala:79: Config system location : /etc/xdg/lxsession/LXDE
** Message: utils.vala:85: System system path location : /etc/xdg/lxsession/LXDE/autostart
** Message: utils.vala:89: Final file used : /etc/xdg/lxsession/LXDE/autostart
** Message: autostart.vala:44: Autostart path : /etc/xdg/lxsession/LXDE/autostart
** Message: app.vala:59: Launching xscreensaver -no-splash (null)
** Message: app.vala:59: Launching lxpanel --profile LXDE
** Message: app.vala:59: Launching pcmanfm --desktop --profile
** Message: app.vala:59: Launching /usr/lib/policykit-1-gnome/polkit-gnome-authentication-agent-1 (null) (null)
** Message: options.vala:37: Options - Launch command (null)

(lxsession:2219): GLib-CRITICAL **: g_spawn_command_line_async: assertion `command_line != NULL' failed
** Message: main.vala:263: Check keymap_mode (null)

(polkit-gnome-authentication-agent-1:2278): GLib-CRITICAL **: g_variant_new_string: assertion `string != NULL' failed

(polkit-gnome-authentication-agent-1:2278): polkit-gnome-1-WARNING **: Failed to register client: GDBus.Error:org.freedesktop.DBus.Error.ServiceUnknown: The name org.gnome.SessionManager was not provided by any .service files
Openbox-Message: Requested key "XF86Terminal" does not exist on the display
** Message: applet now removed from the notification area
** Message: using fallback from indicator to GtkStatusIcon
** Message: applet now embedded in the notification area
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
[2417:2512:661332518:ERROR:download_updates_command.cc(130)] PostClientToServerMessage() failed during GetUpdates
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
[2417:2417:802307357:ERROR:gtk_plugin_container_manager.cc(133)] Request for widget host for unknown window id 35651944
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
Failed to open VDPAU backend libvdpau_r200.so: cannot open shared object file: No such file or directory
** Message: init gpgme version 1.2.0
WARNING: gnome-keyring:: couldn't connect to: /run/user/user/keyring-xxxxxx/pkcs11: No such file or directory

** (seahorse:3086): WARNING **: Couldn't initialize registered PKCS#11 modules: An error occurred on the device
** Message: init gpgme version 1.2.0
WARNING: gnome-keyring:: couldn't connect to: /run/user/user/keyring-xxxxxx/pkcs11: No such file or directory

** (seahorse:3209): WARNING **: Couldn't initialize registered PKCS#11 modules: An error occurred on the device
** Message: PID 3324 (we are 2286) sent signal 15, shutting down...

(nm-applet:2286): libappindicator-WARNING **: Unable to send signal for NewStatus: The connection is closed
** Message: moving back from GtkStatusIcon to indicator

(nm-applet:2286): Gtk-CRITICAL **: gtk_status_icon_set_visible: assertion `GTK_IS_STATUS_ICON (status_icon)' failed
XIO:  fatal IO error 11 (Resource temporarily unavailable) on X server ":0"
      after 210489 requests (210489 known processed) with 0 events remaining.
pcmanfm: Fatal IO error 11 (Resource temporarily unavailable) on X server :0.
I have anonymized user reference and x'ed out keyring reference for security reasons.

The resulting desktop still has base functionality. I can right click on the desktop, which brings up a pop-up with a subset of the programs that should be available on the start menu. <ctrl>+<alt>+<t> still brings up a terminal, so programs can be run by invoking from the command line. Most curiously, guest sessions still bring up the full desktop; only regular users are missing lubuntu-desktop. Moreover, choosing lubuntu netbook at login will bring up a functional desktop with desktop icons and panel. The only option that seems to be choking is the default lubuntu desktop for regular users. Has anyone else experienced this?

I have found two work-arounds:

1. invoke lxpanel from a terminal, which gives me most of the functionality but still missing Desktop icons, and

2. downloaded lxde metapackage from the repository, which gives me a fully functional alternative lxde desktop. Because this second workaround yields a fully functional desktop, this is no longer a critical problem, but I would still like to get to the bottom of things.

More info:

I upgraded a Dell Latitude D600 laptop with the notorious Pentium M processor which lacks PAE capability. Did not review the forum threads giving warning to this known problem until the upgrade process failed to install the 3.5.0-18-generic kernel and fell back to the 3.2.0-33-generic kernel. Upgrade did manage to complete with fallback older kernel, but could missing desktop be tied in to missing kernel? Since the lxde desktop is working properly, this would seem to be unlikely, but one never knows.

All comments/observations appreciated.