Environment tested :
Environment: Windows 7 Enterprise 64-bit
                                                                               
Java version: observed in 1.6.0_26 and 1.8.0_74
                                                                               
Conditions in which observed:
                                                                               
The following files exist :
C:/tmp/mod/foo.txt , C:/tmp/.mod/
                                                                                               
File foo = new File("C:/tmp/mod/foo.txt"); // foo.exists() is true
                                                                                    
foo.getCanonicalPath(foo) -- returns "C:\tmp\.mod\foo.txt" // i.e. inserts "." before mod
       
This bug is present when McAfee Endpoint Encryption for Files and Folders is installed.
     
Uninstalling it and rebooting afterwards results in foo.getCanonicalPath(foo)
returning the correct value of "C:\tmp\mod\foo.txt"