[kod]

I'm sure you will tell me you have already looked at these but anyway, when you right click on the desktop and the window pops out there are two selections for the icons settings, one being the "View" which on mine I shows I have "Medium Icons" selected and only one item ticked which is "Show desktop icons" all other tickboxes are clear.
The second selection after right clicking desktop is "Sort by" from this selection I don't have anything ticked.

Roy,

The only thing I have different from your setup is I have "align to grid" ticked...