Is there a way to change the link name when creating a link on the plasma dashboard? When I drop a icon from menu and create a link in the dashboard, it appends ".desktop" to the display. Thanks.

Which KDE version are you using? For 4.3.x, it should not append .desktop when you drop an icon from the menu. If you are dropping it on folder view widget, then you should be able to rename it normally and remove the .desktop part.

Otherwise, try dropping it over the desktop directly (make sure you have your widgets unlocked).