From the launchpad bug report:

I'm running Ubuntu 10.04 32bit with Gnome, but XFCE environment is also installed and it's the main environment I use.
The machine is remote, so I use it via VNC with resumable sessions.
The desktop icons (Home, Filesystem, Devices, Floppy, etc.) are unmovable via a VNC session. Sometimes when I turn on an external USB device, it's icon appears in the middle of the pack, changing position of other icons. Once the device is turned off, the icons stay shifted down. (But this is another "bug") After such an event, I cann ot put the icons back to their usual place.
(But this isn't caused by the USB device. The icons are unmovable in general, regardless of the USB thing, that was just an example.)
The icon gets highlighted, the "hand" cursor appears, the icon moves when dragging it, but the usual rectangular position marker (where it can be dropped) doesn't appear. After releasing the mouse button, the icon flies back to its position.
When logging in physically, to the same environment, the icons are moveable.

xfwm compositing is enabled on :0, but not on the VNC display. as vnc4server doesn't support glx.

I logged in locally, turned off compositing, logged off, then logged in via VNC, but the icons are still unmovable.