Double clicking terminal Icon on desktop pops up "Untrusted application launcher" message.

Issue

From the GUI session, terminal started from the Applications menu works fine. Adding Terminal launcher to the desktop has following problems:
1 - On the desktop it does not appear as a nice terminal looking icon but a document icon labelled gnome-terminal.desktop shows up.
2 - Double clicking the icon labelled gnome-terminal.desktop pops up "Untrusted application launcher" warning. One of the buttons on this warning box is labelled "Mark as Trusted" but that does not appear to do anything useful.