A couple of days ago my Desire Z silently updated the Market application to v2.2.11.
No idea what the update actually brings (I guess stability fixes) but it had the side effect of removing all application links in the "My Apps" section. That means that no application was listed as Installed, and the only apps in the screen were the purchased ones.
After trying to use the Market Doctor feature of Titanium Backup Pro (yes, I've paid for it) with little to no effect, I decided to delete the Market app's data.
And that was it. All applications were listed properly.
To delete the data, from the home screen go to
"Menu->Settings->Applications->Manage Applications->All->Market" and press the "Force Stop" button to stop the Market App from running, and the press the "Clear Data" button.
When you start the Market again, everything should be listed normally.
I can't guarantee that this will work for everyone or that it won't break anything else!