To fix it for new generation installations:
1. Make it possible to have packages with non-free proprietary software for sale (Ubuntu finally did that)
2. Make sure there is one standard for major distributions (Ubuntu is trying that hard).
3. Merge KDE and Gnome together tightly, so KDE software won't look like alien crap on Gnome and vice-versa.
4. Make sure LibreOffice opens MS Excel and MS Word documents flawlessly, so you can print-out Word document from MS Office and LibreOffice, put two papers on a window and see they're not different a milimeter (they do this in Japan, JFYI).
5. Fuck free-only ideology to slurp all sources into repository and build everything from sources only. Allow proprietary closed-source software.
6. Keep LSB as a fucking Holy Cow and never fucking violate it!
7. Make sure developers can make money from it. They want eat as well.
Oh, but that above will never happen, because everyone wants to have a choice and be free. And choice = chaos and shitload of knobs that a regular user never needs... Too bad, this is mostly geeks-only. Only Ubuntu makes some limited sense on a desktop so non-geeks can use it for a regular daily e-mail/web-browsing/music-playing box.
Linux desktop is too little for too late.