I managed to fix my issue almost completely by removing all references to PathPrefix and PathPrefixExclude in my settings files and clearing the cache.
However in my admin section, the string 'Root' is now appended to the URL for all subdirectories ('Root' = the ez default 'Home', I just changed the label), but not directories below these. ("Level 3" directories if you like)
Before experiencing this issue, this didn't happen.
However for the now, everything worked as it did prior to the problem best described as that at: http://issues.ez.no/IssueView.php?Id=12785.
If anyone has any further info as to how to <b>totally</b> resolve this, I'd be very much obliged.
I upgraded but still experienced a corrupted ezurlalias_ml table. Each time I ran the updateniceurls.php script I ended up with a duplicate entry for one of my three "Level 2" nodes 'Site" (as below)
-+ 'Root'
---- Site
---- Install ---- Site 2
I fixed this by updating the text_md5 column of the corrupted entry with the value of text_md5 of the newer entry (The original entry with an id=2, the newer one had an id=285 or something) and then deleted the original entry.
Running updateniceurls.php again, didn't add a duplicate this time around.
Thanks for the tip, I needed to learn the proper upgrade procedure anyway :-)