browser.urlbar.autofill negates Location bar suggest preference

Starting with a blank profile (all files deleted) I load Firefox.

I make the following settings on the Preferences Privacy tab
  History - Use custom settings for history
     [X] Remember my browsing history
     [X] Accept cookies from sites
          [ ] Accept third party cookies
          Keep until I close Firefox
      [X] Clear history when Firefox Closes
           [Settings] do not clear Browsing history, Saved Passwords, Site Preferences; clear all other items
  Location Bar
       When using the location bar, suggest: [History]

I then type in a couple of URLs, close and restart Firefox. As I type the first couple of letters of one of the URLs which I had accessed and which are in history, the complete URL is displayed as a choice in the Awesome bar ( I think that is what it is called). This is how I expect Firfox to work.

I then import a selection of bookmarks from an HTML file. These were exported from another Firefox profile. I again type the first couple of letters of one of the URLs which I had accessed and which are in history. Just as I described above, the complete URL is displayed. So far, so good.

Per the Firefox documentation at http://kb.mozillazine.org/Inline_autocomplete I change browser.urlbar.autoFill to true.

Firefox now presents URL choices from the bookmarks in addition to history even though the Privacy preference still indicates the suggestions should only come from history. If I change the preference to When using the location bar, suggest: [Nothing] I am still presented with choices from the bookmarks.

This would seem to be incorrect behaviour. Suggestions from bookmarks should NOT be presented.

ProblemType: Bug
DistroRelease: Ubuntu 12.04
Package: firefox 12.0+build1-0ubuntu0.12.04.1
ProcVersionSignature: Ubuntu 3.2.0-24.37-generic-pae 3.2.14
Uname: Linux 3.2.0-24-generic-pae i686
AddonCompatCheckDisabled: False
AlsaVersion: Advanced Linux Sound Architecture Driver Version 1.0.24.
ApportVersion: 2.0.1-0ubuntu7
Architecture: i386
ArecordDevices:
 **** List of CAPTURE Hardware Devices ****
 card 0: AudioPCI [Ensoniq AudioPCI], device 0: ES1371/1 [ES1371 DAC2/ADC]
   Subdevices: 1/1
   Subdevice #0: subdevice #0
AudioDevicesInUse:
 USER PID ACCESS COMMAND
 /dev/snd/controlC0: ken 2164 F.... pulseaudio
BuildID: 20120423122624
CRDA: Error: command ['iw', 'reg', 'get'] failed with exit code 1: nl80211 not found.
Card0.Amixer.info:
 Card hw:0 'AudioPCI'/'Ensoniq AudioPCI ENS1371 at 0x2080, irq 16'
   Mixer name : 'Cirrus Logic CS4297A rev 3'
   Components : 'AC97a:43525913'
   Controls : 24
   Simple ctrls : 13
Channel: release
Date: Mon May 7 08:10:19 2012
ForcedLayersAccel: False
IfupdownConfig:
 auto lo
 iface lo inet loopback
InstallationMedia: Ubuntu 12.04 LTS "Precise Pangolin" - Release i386 (20120423)
IpRoute:
 default via 192.168.0.1 dev eth0 proto static
 169.254.0.0/16 dev eth0 scope link metric 1000
 192.168.0.0/24 dev eth0 proto kernel scope link src 192.168.0.114 metric 1
IwConfig:
 lo no wireless extensions.

 eth0 no wireless extensions.
Plugins:
 iTunes Application Detector - Lib=librhythmbox-itms-detection-plugin.so, Location=/usr/lib/mozilla/plugins
 Windows Media Player Plug-in 10 (compatible; Totem) - Lib=libtotem-gmp-plugin.so, Location=/usr/lib/mozilla/plugins
 VLC Multimedia Plugin (compatible Totem 3.0.1) - Lib=libtotem-cone-plugin.so, Location=/usr/lib/mozilla/plugins
 QuickTime Plug-in 7.6.6 - Lib=libtotem-narrowspace-plugin.so, Location=/usr/lib/mozilla/plugins
 DivX® Web Player - Lib=libtotem-mully-plugin.so, Location=/usr/lib/mozilla/plugins
ProcEnviron:
 TERM=xterm
 PATH=(custom, no user)
 LANG=en_US.UTF-8
 SHELL=/bin/bash
Profiles: Profile0 (Default) - LastVersion=12.0/20120423122624
RfKill:

RunningIncompatibleAddons: False
SourcePackage: firefox
UpgradeStatus: No upgrade log present (probably fresh install)
dmi.bios.date: 06/02/2011
dmi.bios.vendor: Phoenix Technologies LTD
dmi.bios.version: 6.00
dmi.board.name: 440BX Desktop Reference Platform
dmi.board.vendor: Intel Corporation
dmi.board.version: None
dmi.chassis.asset.tag: No Asset Tag
dmi.chassis.type: 1
dmi.chassis.vendor: No Enclosure
dmi.chassis.version: N/A
dmi.modalias: dmi:bvnPhoenixTechnologiesLTD:bvr6.00:bd06/02/2011:svnVMware,Inc.:pnVMwareVirtualPlatform:pvrNone:rvnIntelCorporation:rn440BXDesktopReferencePlatform:rvrNone:cvnNoEnclosure:ct1:cvrN/A:
dmi.product.name: VMware Virtual Platform
dmi.product.version: None
dmi.sys.vendor: VMware, Inc.