Windows 11 stacking icon issue

Set the desktop icons to small icons.

Set Scale and Layout to its default (recommended)

2
Click your Start Button, type regedit and hit Enter to open the Registry Editor

Click View and make sure 'Address Bar' is turned on

Paste this into the Address Bar at the top and hit Enter

HKEY_CURRENT_USER\Control Panel\Desktop\WindowMetrics

In the right hand pane, what values are set for IconSpacing and VerticalIconSpacing

By default, those values should be this minus value: -1128

If that is not the value, double click each item to change the value

Then close the Registry Editor and restart (not shut down) your PC