diff --git a/libtorrent/src/file.cpp b/libtorrent/src/file.cpp
index f641848c7..a1352ae03 100755
--- a/libtorrent/src/file.cpp
+++ b/libtorrent/src/file.cpp
@@ -248,10 +248,10 @@ namespace libtorrent
 		void set_size(size_type s)
 		{
 			size_type pos = tell();
-			seek(s);
+			seek(s - 1);
 			char dummy = 0;
 			read(&dummy, 1);
-			seek(s);
+			seek(s - 1);
 			write(&dummy, 1);
 			seek(pos);
 		}
diff --git a/libtorrent/src/storage.cpp b/libtorrent/src/storage.cpp
index dc0371d73..9a8165af2 100755
--- a/libtorrent/src/storage.cpp
+++ b/libtorrent/src/storage.cpp
@@ -412,6 +412,7 @@ namespace libtorrent
 
 	void storage::initialize(bool allocate_files)
 	{
+		std::cerr << "storage initialize" << std::endl;
 		// first, create all missing directories
 		path last_path;
 		for (torrent_info::file_iterator file_iter = m_info.begin_files(),
@@ -436,6 +437,7 @@ namespace libtorrent
 			// the directory exits.
 			if (file_iter->size == 0)
 			{
+				std::cerr << "creating empty file: " << file_iter->path.string() << std::endl;
 				file(m_save_path / file_iter->path, file::out);
 				continue;
 			}
@@ -1612,20 +1614,17 @@ namespace libtorrent
 			{
 				m_unallocated_slots.push_back(i);
 			}
-			if (m_unallocated_slots.empty())
-			{
-				m_state = state_finished;
-				return true;
-			}
-			if (m_compact_mode)
+			if (m_compact_mode || m_unallocated_slots.empty())
 			{
 				m_state = state_create_files;
+				std::cerr << "storage: -> create_files" << std::endl;
 				return false;
 			}
 		}
 
 		m_current_slot = 0;
 		m_state = state_full_check;
+		std::cerr << "storage: -> full_check" << std::endl;
 		return false;
 	}
 
@@ -1669,7 +1668,7 @@ namespace libtorrent
 			if (m_compact_mode || m_unallocated_slots.empty())
 			{
 				m_state = state_create_files;
-				return std::make_pair(true, 1.f);
+				return std::make_pair(false, 1.f);
 			}
 
 			if (int(m_unallocated_slots.size()) == m_info.num_pieces()
@@ -1709,7 +1708,7 @@ namespace libtorrent
 		{
 			m_storage->initialize(!m_fill_mode && !m_compact_mode);
 
-			if (!m_unallocated_slots.empty())
+			if (!m_unallocated_slots.empty() && !m_compact_mode)
 			{
 				assert(!m_fill_mode);
 				assert(!m_compact_mode);