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After purging Fences, the problem still remained. I found the solution by editing the registry following this article: How to change icon spacing on the Windows 11 desktop

Resolution 5120 x 1440 Scaling 125% Changing the scaling does not change anything

New Screen Shot

Windows 11: 21H2 Fences: 4.0.0.3 Screenshot

Fences Icons lose spacing. How do I correct this?