I had the same problem. It didn't help when I unchecked "Auto Arrange" and "Align icons to Grid" even with a restart. Pressing ESC multiple times (as someone suggested elsewhere) didn't work either. At the time, I was using a Logitech trackball. I plugged in another mouse and I could move the icons. Trackball still didn't work. I clicked on Desktop > View > "Refresh" and now I can move the icons with either mouse.