That bug has been described on https://launchpad.net/distros/ubuntu/+source/nautilus/+bug/35919

"If you have the home folder icon launcher on your desktop, it does not behave like a normal folder. If you drag a file to your home folder, you expect your file to be moved in your home folder. If you drag and drop a file into your home folder launcher, you will receive this error:
"Couldn't display "filename"" - The location is not a folder.
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> Thanks for your bug. How did you get that icon on the desktop? If you use the recommended way and set /apps/nautilus/desktop/home_icon_visible to true, do you get the issue? It works for me but the issue happens if you dnd from the Places menu
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Using /apps/nautilus/desktop/home_icon_visible works fine, but dragging and dropping does not work. Both of these should work properly."