Am happy that you were able to solve your issue, but in my case I didn't install any new software. It just started to happen after Win11 did an update about a week ago. I manually adjusted all my desktop icons the next morning which was difficult because it would not let me put icons close together without auto-arranging them even though auto-arrange was turned off, as was align to grid. So I ended up having to raise all my icons up about a row, leaving an inch of blank real estate at the bottom. But that was the only way it would let me put them clustered together.
The second time it happened I did use a TV as a 4th monitor, which made the resolution flicker. In the past (with Win10) it would flicker and mess up my desktop icons while the TV was on, but as soon as I turned it off they would rearrange back to their original positions. With Win11 they got messed up with the introduction of the 4th screen but never went back when the TV was turned off.
Interestingly enough though, when I had to rearrange them the second time it did allow me to use the bottom inch of the desktop for icons without auto-arranging them (again, auto-arrange is off).
Uninterestingly, it messed them up again this morning, for a third time. I had not used the 4th screen/TV and I had just put my computer to "sleep", not a full shut down or restart or anything. I have no idea why it messed them up this time, but I had to spend another 10 putting them all back again.