just for the sake of stupidity...check to see if you have "auto-arrange icons" selected on your desktop settings (right-click on any clear spot on the desktop & look at the "view" selections on the pop-up. sometimes that will screw things up on Win 7. i very rarely use that setting (since the 3.0 version Hersch mentioned earlier )
Nope, auto arrange is not selected. Sorry.
This is exciting!! I might learn something new today