This is a bug filed here.
I specified the mount point like "sata/160GB", expecting it to mount the device in "/media/sata/160GB". But the problem started here. The system expects only a word here with no slashes(/) in it. While mounting it just creates a folder which you provided, in /media and mounts the volume there.
And this is what I did:
Open gconf-editor in terminal:
In the left panel:
System -> Storage -> volumes
Here you will see the mount point you specified for the device.
Change it to just a single word (OR just remove it :) )
Thats it. Replug your device.
1. Do not use sudo for this purpose.
See this comment by Anonym... (Thanx to Anonym) for detail.
2. Sometimes instead of System -> Storage -> volumes you may also get System -> Storage -> drives , depending upon what you messed up. The rest process is same.