Closing this bug.  As you only need to move the folder down one line to
fix the problem.  Also, this bug applied to dapper.  If you think this
is a mistake, you can always re-open the bug report.  Thanks

** Changed in: Ubuntu
       Status: Unconfirmed => Rejected

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Desktop Display - Startup Icons Overlap/merge
https://bugs.launchpad.net/bugs/50730
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