This is not a Cake 2 issue, would happen with 1.3 too.

You've quite rightly installed the application in a subfolder of your
apache web folder (/cake) so have two options. Change the base dir in
the htaccess file or what most people do is setup a virtul host so you
can access your application at http://appname.

Are you running a WAMP or LAMP environment?

Cake 2 book can be found at:
http://book2.cakephp.org/en/

HTH, Paul

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