This window has the following settings: icon size 16x16, text size 12pt, label position right, snap to grid, and white background. Keep arranged is NOT turned on. Now, this has an annoying "UNREGISTERED VERSION OF SNAPZ PRO" watermark on it, but it still proves my point: the Finder is not letting me drag the icon to where I want it, even though it's an empty place on the grid, and therefore the Finder is BROKEN!
Here are some web pages describing other ways in which the Mac OS X Finder is broken:
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