possible simple graphical solution:
right click on file /home/user
click on tab "permissions"
there are 3 main sections here, Owner Group and Others
under "Others", change folder access
to "Access files"
mine had changed (for some unknown reason) to "create and delete files"
(leave Owner and Group as "create and delete files").
reboot to see if it has worked.
this seemed to work to fix my problem with $home/.dmrc file being ignored.
I found the explanation on permissions at http://www.zzee.com/solutions/linux-permissions.shtml
Still do not really understand how it got changed in the first place and this is a bit concerning.