The same happens on Linux:
$ mkdir a; python2.3 -c 'import shutil; shutil.move("a", "a/c")'
$ ls -l a
ls: a: No such file or directory
Unix mv has a test that prevents this:
$ mkdir a; mv a a/c
mv: cannot move `a' to a subdirectory of itself, `a/c'
I've created a sourceforge bug report about this. Visit here:
http://python.org/sf/919012
Jeff