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NFHS 8-1-3 says that if the ball is to remain dead after the final free throw, then the lane spaces shall be unoccupied.
8-1-5 says that any non-shooter who is not in a marked space must be behind the FT line extended and outside the 3-point arc. Other than that, there are no requirements for where they can stand. IOW, your interpreter did done ya wrong.
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