Originally Posted by casualzone
something wrong with my desktop?
Well, actually, the panel shouldn't be covered by windows, according to your setting. So, something is wrong.
kwin should be responsible for windows placement. Have you installed compiz or any other replacement for kwin, maybe?
Else, this is a bug, obviously.
Any chance to upgrade to newest Kde 3.5?
Else, try to play with the settings. Select "Allow other windows to cover the panel", save settings, see if something changed, and unselect it again.
Try the "Hide automatically" setting. The panel will disappear and it will reappear, when you touch the place, where the panel should be, with your mouse pointer. It will (should) appear above other windows.