diff --git a/core/includes/install.core.inc b/core/includes/install.core.inc
index 493246c..64dbeb2 100644
--- a/core/includes/install.core.inc
+++ b/core/includes/install.core.inc
@@ -793,6 +793,18 @@ function install_verify_requirements(&$install_state) {
  *   An array of information about the current installation state.
  */
 function install_system_module(&$install_state) {
+  global $config_directory_name;
+
+  // Actually create the config directory named above.
+  $config_path = conf_path() . '/files/' . $config_directory_name;
+  if (!file_prepare_directory($config_path, FILE_CREATE_DIRECTORY)) {
+    // How best to handle errors here?
+  };
+
+  // Write out a .htaccess file that will protect the config directory from
+  // prying eyes.
+  file_save_htaccess($config_path, TRUE);
+
   // Install system.module.
   drupal_install_system();
 
@@ -838,12 +850,13 @@ function install_verify_completed_task() {
 }
 
 /**
- * Verifies the existing settings in settings.php.
+ * Verifies the existing database and config directory settings.
  */
 function install_verify_settings() {
-  global $databases;
+  global $databases, $config_directory_name;
+  $errors = array();
 
-  // Verify existing settings (if any).
+  // Verify existing database settings (if any).
   if (!empty($databases) && install_verify_pdo()) {
     $database = $databases['default']['default'];
     drupal_static_reset('conf_path');
@@ -853,6 +866,15 @@ function install_verify_settings() {
       return TRUE;
     }
   }
+
+  // Verify existing config directory (if set).
+  if (!empty($config_directory_name)) {
+    // Check that the specified config directory exists.
+    if (!file_prepare_directory($dir, 0)) {
+      throw new Exception(st("Your config directory, specified as %dir, does not exist or is not writeable. Please create this directory and set it to be writeable by the web server.", array('%dir' => $dir)));
+    }
+  }
+  
   return FALSE;
 }
 
@@ -1011,34 +1033,19 @@ function install_settings_form_submit($form, &$form_state) {
     'required' => TRUE,
   );
 
+  // Create the config directory name while we're at it.
   $settings['config_signature_key'] = array(
     'value'    => drupal_hash_base64(drupal_random_bytes(55)),
     'required' => TRUE,
   );
 
   // This duplicates drupal_get_token() because that function can't work yet.
-  // Wondering if it makes sense to move this later in the process, but its
-  // nice having all the settings stuff here.
-  //
-  // @todo This is actually causing a bug right now, because you can install
-  // without hitting install_settings_form_submit() if your settings.php
-  // already has the db stuff in it, and right now in that case your
-  // config directory never gets created. So this needs to be moved elsewhere.
   $settings['config_directory_name'] = array(
     'value'     => 'config_' . drupal_hmac_base64('', session_id() . $settings['config_signature_key']['value'] . $settings['drupal_hash_salt']['value']),
     'required'  => TRUE,
   );
 
   drupal_rewrite_settings($settings);
-  // Actually create the config directory named above.
-  $config_path = conf_path() . '/files/' . $settings['config_directory_name']['value'];
-  if (!file_prepare_directory($config_path, FILE_CREATE_DIRECTORY)) {
-    // How best to handle errors here?
-  };
-
-  // Write out a .htaccess file that will protect the config directory from
-  // prying eyes.
-  file_save_htaccess($config_path, TRUE);
 
   // Indicate that the settings file has been verified, and check the database
   // for the last completed task, now that we have a valid connection. This