I reinstalled the system from a scratch - Kubuntu followed by LinuxMCE (using 3 CD edition). the same results :-(
One thing that I noticed during MCE installation was that it runs Setup_DisklessMD.sh. I am wondering if I have the wrong disks or am doing something wrong ? Here is what I do :
Install the MCE installer package from Linux MCE CD#1 and that leaves me with a MCE Installer icon on the desktop. When I click on the MCE installer, it ckecks with CORE and starts a Diskless setup and is done within less than 30 seconds. At the end, it displays a box saying - reboot the syetem and then there will be regeneration of skin etc.
In the meantime, I also configure the CORE/ Hybrid for a new Generic PC media director - along with an OnScreen Orbiter. I use MAC address of the PC that I will use for Media director.
After reboot, I have to login to the Kubuntu login prompt using my user id and password. Then I run LMCE from my desktop. All goes well and the Orbiter starts . Somehow the orbiter is in a small screen on the left side - showing BIG buttons and only half the items.
Also, I read somewhere that there is a StartupDiskedMD.sh - a script that I cannot find anywhere on my system.