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I've moved this in here so that all OU outstanding issues are in one place. This is the one remaining MAJOR issue for us.
We've read 11576 but I can interpret the outcome in more than one way.
Also I talked to Martin on 5/10/07 about this and Martin said in an email to me on 5/10/07
"We've been talking it through and working out how to create averages of all non-hidden, non-zero items (for those who can't see hidden items) for both rows (aggregate of categories) and columns (aggregate of users for an item). I agree this is much better (for all).
It's a bit tricky, but we're going to give it a shot, so watch the tracker."
I've been watching the tracker but haven't seen anything specific to this item so I'm placing it here today 11/10/07. (And my apologies if I have missed it or if I should have gone back to 11576)
The issue is what to do about hidden grades when calculating averages. The problem is that some averages still (on 11/10/07) inadvertantly enable hidden grades to be deduced.
Screenshot-1 shows a tutor view. Claire Simpson has one hidden grade under iCMA47 which is in the Summative category. The entry under iCMA47 is correctly shown as a date but the entry under the Category total (titled 'average' in the screenshot) enables the tutor to calculate that she actually got 20%.
Now look at Susan Pearson's row. Again the Category total for the Summative category enables a calculation to be carried out that reveals what Susan's score on iCMA47 is.
So what do we do about this?
My preferred outcome would be that Category totals are calculated purely on what is visible on-screen. So for Claire Simpson the entry under the Summative Category total ( titled ' average') would become '-' because there are no scores to average; and for Susan Pearson the Summative Category total would be 52% (i.e.52/1).
The Course total would have to be calculated in a similar manner.
Similar calculations apply in the OU USER report and in the various other reports we have where the readers cannot view hidden grades.
I understand from what Martin said that this could be tricky. If it is then we have to revert to the fall-back position of showing '-' in Category and Course totals where there are hidden grades.
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Having the grades dependent on who views the report is definitely not good:
1/ it is slow - new gradebook was supposed to be fast (we need this for conditional activities)
2/ export expects only one properly defined grade that is not changing
3/ other parts might break
Proper solution is IMO to change the way aggregation works and allow aggregation with/without the hidden grades depending on category setting. See new linked bug.
I have committed a workaround for 1.9.x, the totals are recalculated on the fly if needed.
There is also a new setting to show date or '-' instead of hidden grades - the problem with dates is that we would have to dig in history table to get proper date, the timemodified is not directly related to modification of grade value.
Please reopen if there are any problems.
Thanks for the report 
Reopening - the altered aggregation for student grades breaks the SQL calculation of column totals on grader report. This can not be fixed easily because we would have to replace the SQL totals calculation with full recalculation of all grades (which means load everything into memory, do the maths and calculate the columns totals from the altered values). Please note that we can not even tell whether the total is affected by hiding or not 
Solutions:
1/ implement hiding db changes and change aggregation logic and store the aggregates without the hidden grades in db if required + undo the last patches (this would require db changes and new settings)
2/ always show hidden grades on grader report, keep the altered ones on user report
3/ add switch to do the complete (and incredibly slow) in-memory calculation (this would require a lot more hacking in the grader report)
I do not think there is an easy way to solve this...
Solutions:
1/ implement hiding db changes and change aggregation logic and store the aggregates without the hidden grades in db if required + undo the last patches (this would require db changes and new settings)
2/ always show hidden grades on grader report, keep the altered ones on user report
3/ add switch to do the complete (and incredibly slow) in-memory calculation (this would require a lot more hacking in the grader report)
I do not think there is an easy way to solve this... 
I actually thought this was done and dusted. I'm following up now.