If there are any moved files in the working directory, those changes are lost on fossil update.

Here are the steps to reproduce:
<pre>
find .
.
./a

./_FOSSIL_
fossil changes
mkdir b
fossil mv a/f b
RENAME a/f b/f
mv a/f b
fossil changes
RENAMED    b/f
find .
.
./a
./_FOSSIL_
./b

### do some changes in the repository ###
fossil update
ADD a/f
REMOVE b/f
ADD ff
--------------
updated-to:   2010-12-28 07:49:47 UTC
tags:         trunk
comment:      Adding file. (user: cpages)
find .
.
./a

./_FOSSIL_
./b
./ff
fossil changes

</pre>