Well, WinMonster2, I'm in the same boat. And I think its sinking
This bug is unfortunately on fences pro also. I just paid the 10 smackers a few days ago (around april 18th) and was just so anxious to set it up to my fancy and just like you I figured the smallest icon size (and yea, I did try all the ctrl+scroll sizes) in a few vertical rowed fences made the most since. But alas, it cant quite squeeze em' into one row. It wasn't always like this. In fact the trial fences used to do fine with it until... now don't quote me on this but I'm roughly 98.74% sure it started this nonsense right after I went from Vista x64 to 7 ultimate x32 bit. I though "man I bet the shiny pro version wouldn't do this. And hey all those awesome new features... /drool and lose focus" btw, friggin awesome work on fences and all the other stuff y'all do. Anyways, its only an issue with the "classic" size icons and I've tried all combinations of the auto arrange and arrange to grid settings. OH JUNK! I reckon I just found what might be a common cause. Go to Control Panel\Appearance and Personalization\Personalization\Window Color and Appearance and click on advance appearance settings. now adjust the "border padding" as many people in vista/7 like to do. Now it seems as though when you change the padding you also have to raise the "icon spacing (horizontal)" to 5x or higher, x being the same number the border padding is set to. Well something like that anyway... It seems to work fine now. I surely do hope this helps you guys figure out how to make this not happen in future releases. And I also hope WinMonster2 visits his own post...
Thanks again for all your awesome junk,
Mike.