diff --git a/modules/system/system.admin.inc b/modules/system/system.admin.inc
index 7ed232a..3402d49 100644
--- a/modules/system/system.admin.inc
+++ b/modules/system/system.admin.inc
@@ -470,17 +470,11 @@ function system_theme_settings($form, &$form_state, $key = '') {
         ),
       ),
     );
-    $logo_path = theme_get_setting('logo_path', $key);
-    // If $logo_path is a public:// URI, display the path relative to the files
-    // directory; stream wrappers are not end-user friendly.
-    if (file_uri_scheme($logo_path) == 'public') {
-      $logo_path = file_uri_target($logo_path);
-    }
     $form['logo']['settings']['logo_path'] = array(
       '#type' => 'textfield',
       '#title' => t('Path to custom logo'),
-      '#default_value' => $logo_path,
       '#description' => t('The path to the file you would like to use as your logo file instead of the default logo.'),
+      '#default_value' => theme_get_setting('logo_path', $key),
     );
     $form['logo']['settings']['logo_upload'] = array(
       '#type' => 'file',
@@ -511,17 +505,11 @@ function system_theme_settings($form, &$form_state, $key = '') {
         ),
       ),
     );
-    $favicon_path = theme_get_setting('favicon_path', $key);
-    // If $favicon_path is a public:// URI, display the path relative to the
-    // files directory; stream wrappers are not end-user friendly.
-    if (file_uri_scheme($favicon_path) == 'public') {
-      $favicon_path = file_uri_target($favicon_path);
-    }
     $form['favicon']['settings']['favicon_path'] = array(
       '#type' => 'textfield',
       '#title' => t('Path to custom icon'),
-      '#default_value' => $favicon_path,
-      '#description' => t('The path to the image file you would like to use as your custom shortcut icon.')
+      '#description' => t('The path to the image file you would like to use as your custom shortcut icon.'),
+      '#default_value' => theme_get_setting('favicon_path', $key),
     );
     $form['favicon']['settings']['favicon_upload'] = array(
       '#type' => 'file',
@@ -530,6 +518,22 @@ function system_theme_settings($form, &$form_state, $key = '') {
     );
   }
 
+  // Inject human-friendly values for logo and favicon.
+  foreach (array('logo' => 'logo.png', 'favicon' => 'favicon.ico') as $type => $default) {
+    if (isset($form[$type]['settings'][$type . '_path'])) {
+      $element = &$form[$type]['settings'][$type . '_path'];
+
+      // If path is a public:// URI, display the path relative to the files
+      // directory; stream wrappers are not end-user friendly.
+      $original_path = $element['#default_value'];
+      $friendly_path = NULL;
+      if (file_uri_scheme($original_path) == 'public') {
+        $friendly_path = file_uri_target($original_path);
+        $element['#default_value'] = $friendly_path;
+      }
+    }
+  }
+
   if ($key) {
     // Call engine-specific settings.
     $function = $themes[$key]->prefix . '_engine_settings';
@@ -657,13 +661,20 @@ function system_theme_settings_validate($form, &$form_state) {
  *   the path could not be validated.
  */
 function _system_theme_settings_validate_path($path) {
-  if (drupal_realpath($path)) {
-    // The path is relative to the Drupal root, or is a valid URI.
+  // Absolute local file paths are invalid.
+  if (drupal_realpath($path) == $path) {
+    return FALSE;
+  }
+  // A path relative to the Drupal root or a fully qualified URI is valid.
+  if (is_file($path)) {
     return $path;
   }
-  $uri = 'public://' . $path;
-  if (file_exists($uri)) {
-    return $uri;
+  // Prepend 'public://' for relative file paths within public filesystem.
+  if (file_uri_scheme($path) === FALSE) {
+    $path = 'public://' . $path;
+  }
+  if (is_file($path)) {
+    return $path;
   }
   return FALSE;
 }
diff --git a/modules/system/system.test b/modules/system/system.test
index f70dae0..59e5974 100644
--- a/modules/system/system.test
+++ b/modules/system/system.test
@@ -1616,6 +1616,8 @@ class SystemMainContentFallback extends DrupalWebTestCase {
  * Tests for the theme interface functionality.
  */
 class SystemThemeFunctionalTest extends DrupalWebTestCase {
+  protected $profile = 'testing';
+
   public static function getInfo() {
     return array(
       'name' => 'Theme interface functionality',
@@ -1625,7 +1627,9 @@ class SystemThemeFunctionalTest extends DrupalWebTestCase {
   }
 
   function setUp() {
-    parent::setUp();
+    parent::setUp(array('node', 'block'));
+
+    $this->drupalCreateContentType(array('type' => 'page', 'name' => 'Basic page'));
 
     $this->admin_user = $this->drupalCreateUser(array('access administration pages', 'view the administration theme', 'administer themes', 'bypass node access', 'administer blocks'));
     $this->drupalLogin($this->admin_user);
@@ -1638,26 +1642,127 @@ class SystemThemeFunctionalTest extends DrupalWebTestCase {
   function testThemeSettings() {
     // Specify a filesystem path to be used for the logo.
     $file = current($this->drupalGetTestFiles('image'));
-    $fullpath = drupal_realpath($file->uri);
-    $edit = array(
-      'default_logo' => FALSE,
-      'logo_path' => $fullpath,
+    $file_relative = strtr($file->uri, array('public:/' => variable_get('file_public_path', conf_path() . '/files')));
+    $default_theme_path = 'core/themes/stark';
+
+    $supported_paths = array(
+      // Raw stream wrapper URI.
+      $file->uri => array(
+        'form' => file_uri_target($file->uri),
+        'src' => file_create_url($file->uri),
+      ),
+      // Relative path within the public filesystem.
+      file_uri_target($file->uri) => array(
+        'form' => file_uri_target($file->uri),
+        'src' => file_create_url($file->uri),
+      ),
+      // Relative path to a public file.
+      $file_relative => array(
+        'form' => $file_relative,
+        'src' => file_create_url($file->uri),
+      ),
+      // Relative path to an arbitrary file.
+      'core/misc/druplicon.png' => array(
+        'form' => 'core/misc/druplicon.png',
+        'src' => $GLOBALS['base_url'] . '/' . 'core/misc/druplicon.png',
+      ),
+      // Relative path to a file in a theme.
+      $default_theme_path . '/logo.png' => array(
+        'form' => $default_theme_path . '/logo.png',
+        'src' => $GLOBALS['base_url'] . '/' . $default_theme_path . '/logo.png',
+      ),
     );
-    $this->drupalPost('admin/appearance/settings', $edit, t('Save configuration'));
-    $this->drupalGet('node');
-    $this->assertRaw($fullpath, t('Logo path successfully changed.'));
+    foreach ($supported_paths as $input => $expected) {
+      $edit = array(
+        'default_logo' => FALSE,
+        'logo_path' => $input,
+      );
+      $this->drupalPost('admin/appearance/settings', $edit, t('Save configuration'));
+      $this->assertNoText('The custom logo path is invalid.');
+      $this->assertFieldByName('logo_path', $expected['form']);
+
+      // Verify logo path examples.
+      $elements = $this->xpath('//div[contains(@class, :item)]/div[@class=:description]/code', array(
+        ':item' => 'form-item-logo-path',
+        ':description' => 'description',
+      ));
+      // Expected default values (if all else fails).
+      $implicit_public_file = 'logo.png';
+      $explicit_file = 'public://logo.png';
+      $local_file = $default_theme_path . '/logo.png';
+      // Adjust for fully qualified stream wrapper URI in public filesystem.
+      if (file_uri_scheme($input) == 'public') {
+        $implicit_public_file = file_uri_target($input);
+        $explicit_file = $input;
+        $local_file = strtr($input, array('public:/' => variable_get('file_public_path', conf_path() . '/files')));
+      }
+      // Adjust for fully qualified stream wrapper URI elsewhere.
+      elseif (file_uri_scheme($input) !== FALSE) {
+        $explicit_file = $input;
+      }
+      // Adjust for relative path within public filesystem.
+      elseif ($input == file_uri_target($file->uri)) {
+        $implicit_public_file = $input;
+        $explicit_file = 'public://' . $input;
+        $local_file = variable_get('file_public_path', conf_path() . '/files') . '/' . $input;
+      }
+      $this->assertEqual((string) $elements[0], $implicit_public_file);
+      $this->assertEqual((string) $elements[1], $explicit_file);
+      $this->assertEqual((string) $elements[2], $local_file);
+
+      // Verify the actual 'src' attribute of the logo being output.
+      $this->drupalGet('');
+      $elements = $this->xpath('//*[@id=:id]/img', array(':id' => 'logo'));
+      $this->assertEqual((string) $elements[0]['src'], $expected['src']);
+    }
+
+    $unsupported_paths = array(
+      // Stream wrapper URI to non-existing file.
+      'public://whatever.png',
+      'private://whatever.png',
+      'temporary://whatever.png',
+      // Bogus stream wrapper URIs.
+      'public:/whatever.png',
+      '://whatever.png',
+      ':whatever.png',
+      'public://',
+      // Relative path within the public filesystem to non-existing file.
+      'whatever.png',
+      // Relative path to non-existing file in public filesystem.
+      variable_get('file_public_path', conf_path() . '/files') . '/whatever.png',
+      // Semi-absolute path to non-existing file in public filesystem.
+      '/' . variable_get('file_public_path', conf_path() . '/files') . '/whatever.png',
+      // Relative path to arbitrary non-existing file.
+      'core/misc/whatever.png',
+      // Semi-absolute path to arbitrary non-existing file.
+      '/core/misc/whatever.png',
+      // Absolute paths to any local file (even if it exists).
+      drupal_realpath($file->uri),
+    );
+    $this->drupalGet('admin/appearance/settings');
+    foreach ($unsupported_paths as $path) {
+      $edit = array(
+        'default_logo' => FALSE,
+        'logo_path' => $path,
+      );
+      $this->drupalPost(NULL, $edit, t('Save configuration'));
+      $this->assertText('The custom logo path is invalid.');
+    }
 
     // Upload a file to use for the logo.
-    $file = current($this->drupalGetTestFiles('image'));
     $edit = array(
       'default_logo' => FALSE,
       'logo_path' => '',
       'files[logo_upload]' => drupal_realpath($file->uri),
     );
-    $options = array();
-    $this->drupalPost('admin/appearance/settings', $edit, t('Save configuration'), $options);
-    $this->drupalGet('node');
-    $this->assertRaw($file->name, t('Logo file successfully uploaded.'));
+    $this->drupalPost('admin/appearance/settings', $edit, t('Save configuration'));
+
+    $fields = $this->xpath($this->constructFieldXpath('name', 'logo_path'));
+    $uploaded_filename = 'public://' . $fields[0]['value'];
+
+    $this->drupalGet('');
+    $elements = $this->xpath('//*[@id=:id]/img', array(':id' => 'logo'));
+    $this->assertEqual($elements[0]['src'], file_create_url($uploaded_filename));
   }
 
   /**
@@ -1716,20 +1821,20 @@ class SystemThemeFunctionalTest extends DrupalWebTestCase {
    * Test switching the default theme.
    */
   function testSwitchDefaultTheme() {
-    // Enable "stark" and set it as the default theme.
-    theme_enable(array('stark'));
+    // Enable Bartik and set it as the default theme.
+    theme_enable(array('bartik'));
     $this->drupalGet('admin/appearance');
-    $this->clickLink(t('Set default'), 1);
-    $this->assertTrue(variable_get('theme_default', '') == 'stark', t('Site default theme switched successfully.'));
+    $this->clickLink(t('Set default'));
+    $this->assertEqual(variable_get('theme_default', ''), 'bartik');
 
     // Test the default theme on the secondary links (blocks admin page).
     $this->drupalGet('admin/structure/block');
-    $this->assertText('Stark(' . t('active tab') . ')', t('Default local task on blocks admin page is the default theme.'));
-    // Switch back to Bartik and test again to test that the menu cache is cleared.
+    $this->assertText('Bartik(' . t('active tab') . ')', t('Default local task on blocks admin page is the default theme.'));
+    // Switch back to Stark and test again to test that the menu cache is cleared.
     $this->drupalGet('admin/appearance');
     $this->clickLink(t('Set default'), 0);
     $this->drupalGet('admin/structure/block');
-    $this->assertText('Bartik(' . t('active tab') . ')', t('Default local task on blocks admin page has changed.'));
+    $this->assertText('Stark(' . t('active tab') . ')', t('Default local task on blocks admin page has changed.'));
   }
 }