diff --git a/IPython/genutils.py b/IPython/genutils.py
index 2dbe37a..2deca30 100644
--- a/IPython/genutils.py
+++ b/IPython/genutils.py
@@ -931,13 +931,11 @@ def get_home_dir():
     if hasattr(sys, "frozen"): #Is frozen by py2exe
         if '\\library.zip\\' in IPython.__file__.lower():#libraries compressed to zip-file
             root, rest = IPython.__file__.lower().split('library.zip')
-            if isdir(root + '_ipython'):
-                os.environ["IPYKITROOT"] = root.rstrip('\\')
-                return root
         else: 
-            root=os.path.abspath(os.path.join(os.path.split(IPython.__file__)[0],"../../"))
+            root=os.path.join(os.path.split(IPython.__file__)[0],"../../")
+        root=os.path.abspath(root).rstrip('\\')
         if isdir(os.path.join(root, '_ipython')):
-            os.environ["IPYKITROOT"] = root.rstrip('\\')
+            os.environ["IPYKITROOT"] = root
             return root
     try:
         homedir = env['HOME']
@@ -958,7 +956,7 @@ def get_home_dir():
                     if not isdir(homedir):
                         raise HomeDirError
                 return homedir
-            except:
+            except KeyError:
                 try:
                     # Use the registry to get the 'My Documents' folder.
                     import _winreg as wreg
diff --git a/IPython/tests/test_genutils.py b/IPython/tests/test_genutils.py
index 7e4bb78..cae3d9f 100644
--- a/IPython/tests/test_genutils.py
+++ b/IPython/tests/test_genutils.py
@@ -16,31 +16,142 @@ __docformat__ = "restructuredtext en"
 #-----------------------------------------------------------------------------
 
 from IPython import genutils
-import os
+
+import os, sys, IPython
 env = os.environ
 
+from os.path import join, abspath
 
 def test_get_home_dir_1():
-    """Make sure we can get the home directory."""
+    """Testcase to see if we can call get_home_dir without Exceptions."""
     home_dir = genutils.get_home_dir()
-
+    
 def test_get_home_dir_2():
-    """Make sure we can get the home directory."""
-    old=env["HOME"]
-    env["HOME"]=os.path.join(".","home_test_dir")
+    """Testcase for py2exe logic, un-compressed lib
+    """
+    sys.frozen=True
+    oldstuff=IPython.__file__
+    
+    #fake filename for IPython.__init__
+    IPython.__file__=abspath(join(".", "home_test_dir/Lib/IPython/__init__.py"))
+    
+    home_dir = genutils.get_home_dir()
+    assert home_dir==abspath(join(".", "home_test_dir"))
+    IPython.__file__=oldstuff
+    del sys.frozen
+    
+def test_get_home_dir_3():
+    """Testcase for py2exe logic, compressed lib
+    """
+    
+    sys.frozen=True
+    oldstuff=IPython.__file__
+    
+    #fake filename for IPython.__init__
+    IPython.__file__=abspath(join(".", "home_test_dir/Library.zip/IPython/__init__.py"))
+    
+    home_dir = genutils.get_home_dir()
+    assert home_dir==abspath(join(".", "home_test_dir")).lower()
+
+    del sys.frozen
+    IPython.__file__=oldstuff
+
+
+def test_get_home_dir_4():
+    """Testcase $HOME is set, then use its value as home directory."""
+    oldstuff=env["HOME"]
+
+    env["HOME"]=join(".","home_test_dir")
     home_dir = genutils.get_home_dir()
     assert home_dir==env["HOME"]
-    env["HOME"]=old
     
+    env["HOME"]=oldstuff
 
+def test_get_home_dir_5():
+    """Testcase $HOME is not set, os=='posix'. 
+    This should fail with HomeDirError"""
+    oldstuff=env["HOME"],os.name
+    
+    os.name='posix'
+    del os.environ["HOME"]
+    try:
+        genutils.get_home_dir()
+        assert False
+    except genutils.HomeDirError:
+        pass
+    finally:
+        env["HOME"],os.name=oldstuff
+        
+def test_get_home_dir_6():
+    """Testcase $HOME is not set, os=='nt' 
+    env['HOMEDRIVE'],env['HOMEPATH'] points to path."""
+    
+    oldstuff=env["HOME"],os.name,env['HOMEDRIVE'],env['HOMEPATH']
+    
+    os.name='nt'
+    del os.environ["HOME"]
+    env['HOMEDRIVE'],env['HOMEPATH']=os.path.abspath("."),"home_test_dir"
+
+    home_dir = genutils.get_home_dir()
+    assert home_dir==abspath(join(".", "home_test_dir"))
+    
+    env["HOME"],os.name,env['HOMEDRIVE'],env['HOMEPATH']=oldstuff
+
+def test_get_home_dir_8():
+    """Testcase $HOME is not set, os=='nt' 
+    env['HOMEDRIVE'],env['HOMEPATH'] do not point to path.
+    env['USERPROFILE'] points to path
+    """
+    oldstuff=(env["HOME"],os.name,env['HOMEDRIVE'],env['HOMEPATH'])
+    
+    os.name='nt'
+    del os.environ["HOME"]
+    env['HOMEDRIVE'],env['HOMEPATH']=os.path.abspath("."),"DOES NOT EXIST"
+    env["USERPROFILE"]=abspath(join(".","home_test_dir"))
 
+    home_dir = genutils.get_home_dir()
+    assert home_dir==abspath(join(".", "home_test_dir"))
+    
+    (env["HOME"],os.name,env['HOMEDRIVE'],env['HOMEPATH'])=oldstuff
+
+def test_get_home_dir_9():
+    """Testcase $HOME is not set, os=='nt' 
+    env['HOMEDRIVE'],env['HOMEPATH'], env['USERPROFILE'] missing
+    """
+    import _winreg as wreg
+    oldstuff = (env["HOME"],os.name,env['HOMEDRIVE'],
+                env['HOMEPATH'],env["USERPROFILE"],
+                wreg.OpenKey, wreg.QueryValueEx,
+                )
+    os.name='nt'
+    del env["HOME"],env['HOMEDRIVE']
+
+    #Stub windows registry functions
+    def OpenKey(x,y):
+        class key:
+            def Close(self):
+                pass
+        return key()
+    def QueryValueEx(x,y):
+        return [abspath(join(".", "home_test_dir"))]
+
+    wreg.OpenKey=OpenKey
+    wreg.QueryValueEx=QueryValueEx
+
+
+    home_dir = genutils.get_home_dir()
+    assert home_dir==abspath(join(".", "home_test_dir"))
 
+    (env["HOME"],os.name,env['HOMEDRIVE'],
+     env['HOMEPATH'],env["USERPROFILE"],
+     wreg.OpenKey, wreg.QueryValueEx,) = oldstuff
+     
 
 def test_get_ipython_dir():
-    """Make sure we can get the ipython directory."""
+    """Testcase to see if we can call get_ipython_dir without Exceptions."""
     ipdir = genutils.get_ipython_dir()
 
 def test_get_security_dir():
-    """Make sure we can get the ipython/security directory."""
+    """Testcase to see if we can call get_security_dir without Exceptions."""
     sdir = genutils.get_security_dir()
     
\ No newline at end of file