The GCS_Assumed_Geographic_1 coordinate system definition was created for ArcGIS 8 to permit ArcMap to infer the coordinate system for certain shapefiles when the coordinate system is undefined. The shapefile's extent must have values that look like decimal degrees. For instance, if longitude, or x, values are between -180 and +180, ArcMap "assumes" the coordinate system is in degrees and assigns GCS_Assumed_Geographic_1. ArcMap then can project the data on the fly, although there are no valid geographic (datum) transformations. The coordinate system is not permanently attached to the shapefile. If you look at the shapefile's metadata, the coordinate system is undefined.
In version 9.2, GCS_Assumed_Geographic_1 was removed. Shapefiles, even if their extents fit decimal degrees, will have an unknown coordinate system in ArcMap. Shapefiles that did line up, because they were projected on the fly before, will no longer line up with datasets in other coordinate systems.
If you have a shapefile that no longer lines up in version 9.2, check its coordinate system.
Occasionally, data has been defined with the GCS_Assumed_Geographic_1 coordinate system. If you see that a shapefile or other data type displays the GCS_Assumed_Geographic_1 coordinate system, take steps to identify the data's true coordinate system.Feedback on this topic?