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I've reread the manual but I just can't figure out what I'm doing wrong. I've been playing as the Allies so I haven't really used this function - until the Germans started trying to beat up on my British units around Caen. So I formed a defensive line along those woods and I clearly control the area towards Caen up to two hexes. So at the start of the Allied turn, I move a British unit one hex immediately in front it (it's performed no actions to this point and has three bullets supply), click on the orange detachment button, and move back into the wooded hex where it started from. I immediately notice that no detachment icon is shown, even though the orange detachment button shows that it's been 'used'. What am I missing here?

Well, it sounds like you just can't SEE it. On one of my systems the light tan of the Allied detachments is VERY hard to see--try using the ALT key to magnify the hex and see if that helps.

If you move a different unit into that hex which has detachment capability it will NOT let you drop a detachment if you already had successfully placed one there. Or if that hex has a minefield you can't lay a detachment on top of it.