It’s probably happened to more people than that would admit it. You put the drupal core modules that belong in the Modules folder at the root of a drupal install into sites/all/modules. Once the core modules are in sites/all/modules that’s the only place where drupal recognizes them.

Even worse, the database sees the files there and so if you remove them from sites/all/modules the website will break.

Here’s the proper procedure to move the core files back to where they belong and out of sites/all/modules:

1. Install latest modules and put all core modules where they belong: in the modules folder found at the root of the install.
2. Delete all core modules from where they shouldn’t be.  (sites/all/modules/)
3. You may want to check to ensure that you’ve detected all the core modules in the wrong place by running this module detection snippet.
4. In phpmyadmin run this query under the system table (assuming the core modules are in sites/all/modules):
   UPDATE system SET filename = REPLACE (
filename,
'sites/all/modules/',
'modules/');
5. Run core update.
6. Visit Sites/all/modules