Ouch! I see what you mean, looking at that screenshot. I didn't notice this problem with default new-user settings, but I think that's because I'm using a fairly-high display resolution: 1152x864. Looks to me like that screenshot was taken using a lower resolution setting (assuming Nautilus chooses a fixed percentage of the display for the initial window-size). If my theory is right, people with low-res displays will be worst affected by this bug.
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