I had this problem at http://www.chasingthewind.net before when I tried an August nightly of 1.3. With Podz help, I reverted back to 1.2.
Last night I upgraded to 1.2.1. I uploaded everything, ran upgrade.php. An hour later, all the formatting on my blog is borked. When you try to comment, you're sent to a login page where you can't login.
Clicking on the "Login" button redirects you to this bizarre link:
And before somebody tells me to delete "Blue%20Swirly", that's not the problem. Even with a complete default WordPress install, I have this munged formatting problem.