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** This issue is addressed in ArcGIS 9.0 Service Pack 2 (SP2) **
New GeoTransformation dialog incorrectly setting dy (y translation) param to zero.
In ArcMap, a custom GeoTransformation (datum transformation) can be defined to properly transform and project data on-the-fly. The Position Vector and Coordinate Frame methods are currently unusable because the dy value (y axis translation) is not being read properly from the dialog. It is always converted to zero.