I also have the same problem, checked everything as stated here:
a) Don't have SVN and .svn folder
b) Have custom.conf as stated here
My box info (let me know if I have to add something)
Distributor ID: Ubuntu
Description:    Ubuntu 9.10
Release:        9.10
Codename:       karmic
Linux 2.6.31-21-generic #59-Ubuntu SMP Wed Mar 24 07:28:56 UTC 2010 i686 
GNU/Linux

Inserted an USB thumb drive and it appears as USB0, it states is unable
to set permissions (but it can "read" as it shows the contents but to
delete/copy/create folders the only way I had to do it is by
"remounting" it as root.

Please advise

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cannot mount usb volumes: "Not authorized", after upgrade to Karmic
https://bugs.launchpad.net/bugs/478274
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