git merge failure: what next?

I cannot figure out how to resolve a problem with git merge.

I usually use "git pull" to merge changes from a central repository  
before pushing local changes to the central repository.
I've learned from bitter experience not to have changes in the  
intermediate cache/stage/index, since that always leads to
confusion -- but it's possible I failed to follow that rule in this  
case.

The working tree is currently dirty with lots of changes I'm not ready  
to commit.

Anyway, now  I get this:

% git pull
*** : needs update
	.
	.
fatal: Entry 'correct/orblag/orblag' would be overwritten by merge.  
Cannot merge.
Merge with strategy recursive failed.
%

At this point, I usually do something like remove the 'correct/orblag/ 
orblag', knowing that I just want
whatever is in the repository (or ultimately, not caring, provided I  
can get past this message).

However, that doesn't work:

% rm correct/orblag/orblag
rm: cannot remove `correct/orblag/orblag': No such file or directory

Also,

% git mergetool
No files need merging

I'm stuck.

A related problem is that although I'm usually able to get past this  
problem by deleting
a file, this can be tedious as there may be multiple files with  
conflicts, but git-merge only
lets me know about the first one it finds.  Knowing all the conflicts  
right off the bat would
give me an idea about the breadth of the problem.

Another possibility I might like to see is the CVS approach -- just  
create combined files
with all the differences in them instead of hanging up on the first  
conflict.

Suggestions?
Thanks,
-- danq