diff --git a/lib/jekyll/entry_filter.rb b/lib/jekyll/entry_filter.rb
index a547ae8b..458aa4e1 100644
--- a/lib/jekyll/entry_filter.rb
+++ b/lib/jekyll/entry_filter.rb
@@ -2,8 +2,24 @@ module Jekyll
   class EntryFilter
     attr_reader :site
 
-    def initialize(site)
+    def initialize(site, base_directory = nil)
       @site = site
+      @base_directory = derive_base_directory(@site, base_directory.dup)
+    end
+
+    def base_directory
+      @base_directory.to_s
+    end
+
+    def derive_base_directory(site, base_dir)
+      if base_dir.start_with?(site.source)
+        base_dir[site.source] = ""
+      end
+      base_dir
+    end
+
+    def relative_to_source(entry)
+      File.join(base_directory, entry)
     end
 
     def filter(entries)
@@ -27,7 +43,9 @@ module Jekyll
     end
 
     def excluded?(entry)
-      site.exclude.glob_include?(entry)
+      excluded = site.exclude.glob_include?(relative_to_source(entry))
+      Jekyll.logger.debug "excluded?(#{relative_to_source(entry)}) ==> #{excluded}"
+      excluded
     end
 
     def symlink?(entry)
diff --git a/lib/jekyll/site.rb b/lib/jekyll/site.rb
index 95bb46f9..48173835 100644
--- a/lib/jekyll/site.rb
+++ b/lib/jekyll/site.rb
@@ -140,7 +140,7 @@ module Jekyll
       base = File.join(self.source, self.config['layouts'])
       return unless File.exists?(base)
       entries = []
-      Dir.chdir(base) { entries = filter_entries(Dir['**/*.*']) }
+      Dir.chdir(base) { entries = filter_entries(Dir['**/*.*'], base) }
 
       entries.each do |f|
         name = f.split(".")[0..-2].join(".")
@@ -157,7 +157,7 @@ module Jekyll
     # Returns nothing.
     def read_directories(dir = '')
       base = File.join(self.source, dir)
-      entries = Dir.chdir(base) { filter_entries(Dir.entries('.')) }
+      entries = Dir.chdir(base) { filter_entries(Dir.entries('.'), base) }
 
       self.read_posts(dir)
       self.read_drafts(dir) if self.show_drafts
@@ -339,8 +339,8 @@ module Jekyll
     # entries - The Array of String file/directory entries to filter.
     #
     # Returns the Array of filtered entries.
-    def filter_entries(entries)
-      EntryFilter.new(self).filter(entries)
+    def filter_entries(entries, base_directory = nil)
+      EntryFilter.new(self, base_directory).filter(entries)
     end
 
     # Get the implementation class for the given Converter.
@@ -381,7 +381,7 @@ module Jekyll
     def get_entries(dir, subfolder)
       base = File.join(self.source, dir, subfolder)
       return [] unless File.exists?(base)
-      entries = Dir.chdir(base) { filter_entries(Dir['**/*']) }
+      entries = Dir.chdir(base) { filter_entries(Dir['**/*'], base) }
       entries.delete_if { |e| File.directory?(File.join(base, e)) }
     end
 
diff --git a/site/_config.yml b/site/_config.yml
index fc1fd46d..7181a663 100644
--- a/site/_config.yml
+++ b/site/_config.yml
@@ -1,4 +1,4 @@
-highlight: pygments
+highlighter: pygments
 relative_permalinks: false
 gauges_id: 503c5af6613f5d0f19000027
 permalink: /news/:year/:month/:day/:title/