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When creating a custom geographic (datum) transformation for two geographic coordinate systems that use different units, all of the data may not display.
An extent that uses the output units is used to find which features to display. If the data frame units are radians but the original data is in degrees, only a tiny subset of a world dataset is displayed.
This problem is addressed in ArcGIS 8.1 Service Pack 1. See the Related Information section to download this pack.