Open File fails to open file containing ~ in name

[Stanislav Brabec]

In GNU Emacs 20.7.1 (i686-pc-linux-gnu, X toolkit)
 of Fri Jul 28 2000 on utx
configured using `configure  --with-x --with-gcc'

Please describe exactly what actions triggered the bug
and the precise symptoms of the bug:

I have tried to open file named /dist/docs/www.ph.ed.ac.uk/~sjc/java/index.html

I have failed any way (C-x C-f and type whole name, press TAB and
comlete by mouse) to open this file from running emacs. I got message:
Use C-u M-x make-directory RET RET to create directory and its parents
(emacs was trying to open the file in home of sjc).

The only way to open the file is to run new emacs by
emacs /dist/docs/www.ph.ed.ac.uk/~sjc/java/index.html

-- 
Stanislav Brabec