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Upgraded to Mountain Lion a few weeks ago, didn't have the problem. A few days ago I replaced the hard drive with a SSD and did a clean install of Mountain Lion then manually moved my background images to the new drive. I added the folders to the sidebar in the System Preferences > Desktop & Screensaver panel. After closing it and reopening it, every folder but the last selected folder is gone.

I tried removing ~/Library/Preferences/com.apple.systempreferences.plist then rebooted and the problem remained.

Steps to reproduce:

  • Open System Preferences > Desktop
  • Add Folder A to panel
  • Add Folder B to panel
  • Open Folder B and choose image from it to set desktop
  • Click Folder A to browse it
  • Close System Preferences
  • Reopen System Preferences > Desktop
  • See that Folder A remains

Video screenshot: http://www.youtube.com/watch?v=1Qy01PS0aT0

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This gained traction on Discussions - discussions.apple.com/thread/4634941 –  anjunatl Jan 3 '13 at 14:04
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