Or at least, in the ‘My Pictures’ folder in Windows XP Explorer. Try it yourself – ensure the watermark is enabled. Then right click and select ‘New Text Document’. Click to remove the rename highlight. Then select it again and press Shift+Del. Hit Yes.
If this reproduces on your computer, you’ll see something like this:
I guess the ListView code simply calls ScrollWindowEx to move any remaining lines up, but doesn’t take account of the watermark.
New technology plug: since Avalon is a stored graph system, it should handle this kind of thing for you. That is, you tell it what components make up your rendering – it renders the appropriate parts as required.