diff -ru old/src/nautilus-open-terminal.c nautilus-open-terminal-0.18/src/nautilus-open-terminal.c
--- old/src/nautilus-open-terminal.c	2010-07-01 12:56:12.305486000 -0400
+++ nautilus-open-terminal-0.18/src/nautilus-open-terminal.c	2010-07-01 12:55:20.168662000 -0400
@@ -430,9 +430,15 @@
 					       "NautilusOpenTerminal::open_terminal_%s",
 					       command_to_run);
 	} else {
-		action_name = g_strdup (remote_terminal ? 
-					"NautilusOpenTerminal::open_remote_terminal" :
-					"NautilusOpenTerminal::open_terminal");
+		if (is_file_item) {
+			action_name = g_strdup (remote_terminal ? 
+						"NautilusOpenTerminal::open_remote_terminal_folder" :
+						"NautilusOpenTerminal::open_terminal_folder");
+		} else {
+			action_name = g_strdup (remote_terminal ? 
+						"NautilusOpenTerminal::open_remote_terminal" :
+						"NautilusOpenTerminal::open_terminal");
+		}
 	}
 	ret = nautilus_menu_item_new (action_name, name, tooltip, "gnome-terminal");
 	g_free (action_name);