My arduino desktop now has a filesystem.  I can't do much with it yet, but it works. I also made some other improvements:

1. better task manager
2. CLI improvements
3. new GUI color scheme

Here is a video:

Also, like I said in the video, I am making a board with:

1. Arduino mega
2. NGT20
3. PS/2 Keyboard port
4. SD card slot

All in one arduino-mega sized board.