The following failure codes can be returned: 1 Error in command line syntax. 2 One of the files passed on the command line did not exist. 3 A required tool could not be found. 4 The action failed. 5 No permission to read one of the files passed on the command line. ...
I found a solution! However it's not great as it requires manually inserting the entire XDG_DATA_DIRS line. I do think that this is a bug in lxsession though and maybe the Raspberry Pi peeps can investigate and fix? Obviously replace the "pi" if you're logged in as a different user...