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Bug: A custom geographic transformation in ArcMap is incorrect

Description

After defining a custom geographic (datum) transformation, the results are incorrect or a dataset doesn't line up properly with other data.

Cause

The Y translation (dy) transformation parameter is always set to zero by the transformation process. This parameter can be viewed in the status text at the bottom of the dialog.

Workaround

This is addressed in ArcGIS Service Pack 2.