Here is what I think the solution is :

The install program does not realize that you have a separate partition for your
/home directory, and therefore has put the /home directory on the partition that
it use to install Kubuntu in. Why is this the case, to prevent the installer
program from erasing wanted data. Think of it this way what if you have multiple
/home directories, the programming required would become very complex, and that
is what manual partitioning is for, and that means no automatic partitioning by
the installer at all what ever you tell the installer to do it does. With all
that written hears how I would approach the problem.

Since you have your data backed up, I would reinstall the Kubuntu 10.10. During
the Kubuntu install process I think third screen in, and the last choice to
manually repartition your hard disk, and that is the choice you want to use. Now
on the hard disk which one is installing Kubuntu to, one needs to reformat two
partitions

1. root partition ' / ' needs to be reformatted. This is where your new
applications will be installed, which is what you want, the updated stuff. Just
select the partition and from the drop down menu choose ' / ' , and the format
check box should have check automatically.
2. Do not reformat partition ' /home ', and this is where you have installed all
your data, which you have backed up to the hard disk. You have to select this
partition and from the drop down menu select /home, and do not click on the
format check box.
3. last partition is ' swap ' partition. Just click on the format check to
format this partition, which should all ready be created.