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Can you please explain what do you mean by "scaled it down a bit"? Did you resize the source map? Or just using zoom settings in data file?
Also please make sure that you are using correct data file for the correct map.
Finally, can you please provide some examples that we could check?
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OK, the main reason your markers are not showing up in the proper place is that you have not included the bounding coordinates, which callibrate the map for real-world coordinates and you have not configured the settings to use Mercator projection, which is required to support real-world coordinates.
In the data file...
change
<map map_file="maps/world3.swf" zoom="1078%" zoom_x="-861.02%" zoom_y="-519.98%">
to
<map map_file="maps/world3.swf" zoom="1078%" zoom_x="-861.02%" zoom_y="-519.98%" tl_long="-168.49" tl_lat="83.63" br_long="190.3" br_lat="-55.58">
In the settings file...
change
<projection>xy</projection>
to
<projection>mercator</projection>
That should resolve most of your accuracy problems.
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Each map file is calibrated as close as possible to reflect real-world coordinates, so you need to use the coordinates that come with the map -- the ones I provided above:
<map map_file="maps/world3.swf" zoom="1078%" zoom_x="-861.02%" zoom_y="-519.98%" tl_long="-168.49" tl_lat="83.63" br_long="190.3" br_lat="-55.58" >
This is for the entire map, not just the part you want to zoom in on.
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