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When either modifying a circular arc by moving a vertex so that the radius is large, or creating a new circular arc with a large radius, incorrect results of varying severity could display. The most extreme situation is that the map display is corrupted by a permanent artifact that cuts across the extent of the map.
The stored geometry is not affected.
This is a known problem.
This problem is addressed in ArcGIS 8.1 Service Pack 1. See the Related Information section to download this pack.