Bill,
The Desktop icons layout are preserved in the following registry key (Tip
from David Candy):
HKEY_CURRENT_USER\Software\Microsoft\Windows\Shell\Bags\1\Desktop
It is possible that one of the REG_BINARY values got corrupt. Try resetting
the values using these steps:
Note: First, create a System Restore point, even though the following
procedure does nothing to the data. Save all your work, close all the
running applications and then try this:
1. Open Regedit.exe minimize it.
2. Click Start, Turn Off computer.
3. Press and hold the CTRL, ALT and the SHIFT keys, and click the Cancel
button.
4. Now, the explorer.exe process will be terminated fully.
5. Switch to Registry Editor window, and navigate to the following key:
HKEY_CURRENT_USER\Software\Microsoft\Windows\Shell\Bags\1\Desktop
6. Rename the key "Desktop" to something else, say "OlderDesktop"
7. Close Registry Editor
8. Press CTRL + ALT + DEL to open Task Manager
9. Click the Shutdown menu, and select "Logoff <username>"
10. Relogin again, customize the desktop icons placement.
11. Restart Windows and see if the icon positions are retained.
Credits to:
David Candy, jeffdav's blog (The CTRL+ALT+SHIFT technique is from jeffdav)
http://blogs.msdn.com/jeffdav/archive/2004/07/22/191636.aspx