Reinstall Fances 6.46 seems to have fixed the issue. One weird thing though, unchecking 'Use same spacing inside and outside of Fence groups' actually make the icons sit tighter, which is fine. I assume that means that the 'Keep groups spaced 0 pixels' is now the controlling factor.
The latest Fence version introduced this problem: After Windows start then Icons are spaced so that icons on the second line in a group becomes invisible. The Layout Management menu has 'Keep groups spaced 0 pixels', and 'Use same spacing inside and outside of Fence groups' is checked. The circumvention is to uncheck and check 'Use same spacing inside and outside of Fence groups'. Fences version is 6.46 Windows version is 11 Home 25H2