Don't use -f for rm in tests where not needed. Drop /bin/ from /bin/rm.
#!/bin/sh
# Test for changeset ba7c74081861
# (update dirstate correctly for non-branchmerge updates)
hg init a
cd a
echo a > a
hg add a
hg commit -m a
cd ..
hg clone a b
cd a
hg mv a b
hg commit -m move
echo b >> b
hg commit -m b
cd ../b
hg pull ../a
hg update