Sorry, the EXACT wording of the setting in General Settings/Appearance options is:
Quote:
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Display products list in multiple columns (1-3) (leave empty to use standard format):
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This does work fine, I do it all the time. In fact, I just tested it out on a fresh install and it works fine. This means that somewhere along the line you either edited products.tpl or products_t.tpl, so I suggest restoring them both and starting over on your mods to those templates.