As for as misconceptions and/or urban legends go...
the whole Kami thing (as mention)
A Sesame Street Muppet either has died or will die soon, usually Ernie, Bert or Grover falls into this group and it usually cause of cancer, aids, or a car accident.
Bert and Ernie are gay, that's one I wish would just die already the most. (I mean it's one thing when shows like Madtv or Family Guy make jokes about that, but it really annoys me when people think that's an honest to god fact and in some cases actually attack them for that)
Cookie Monster being changed to Veggie Monster
Oscar the Grouch is an "evil character" on Sesame Street (I don't know why, but that one really bugs me) and he's gotten a lot "softer" or "nicer" over the years. The fact is Oscar gets annoyed by other Sesame Street characters, but he still cares for them. He doesn't want to see bad things happen to them or anything like that./QUOTE]
I didn't think about that last one (Oscar being a "negative" character) until you mentioned it. Yeah, that one also bugs me. The whole hype basically started with the two Christmas specials from 1978, those two being Christmas Eve and A Special __ Christmas. The former as we all know went on to become a "treasured classic", yet forever colorized people's perception of the character, which was far from what he actually was in the actual show: just a grouch, nothing else. Would also like to add that the TV show and the TV specials line are totally separate areas from each other* And they seem to carry on this "negative" trait in projects outside of the actual show, which still shows him in a positive light. Heck, they even had him as a member of the "Evil League" in the Imagination Land episode of South Park.
Of course, I liked how they poked fun at this in the "Night at the Museum" sequel.
http://www.youtube.com/watch?v=Zj5ykA-3ZhE
* - I think I've seen a similar pattern like this somewhere before: If anyone's ever been to the ToonZone Forums, where they've had numerous discussions of Scooby-Doo, mostly on the whole "Scrappy Debate" (liking or hating the character), one of the users makes a good observation on the differences between the "true" and "nega" canons, and how Scrappy is portrayed negatively in the latter (eg: the live-action movie, and the spoofs on CN, including the "Shaggy Busted" episode of Harvey Birdman)