Why do the condensing coils on the dehumidifier ice up? This unit is in my basement and I can feel humidity and dampness is present. The unit is set to the #3 position on the dial.

Have you cleaned the coils and have a clean filter? It theoreticaly should not ice up then. I've only had a dehumidifier ice up only due to dirty coils and dirty filter.

The problem is not the condenser. It is the evaporator that is icing up. Hot discharge gas from the compressor goes to the condenser, it will not ice up. If you do not get good enough air flow across the evaporator coil this will cause it to ice up. This is caused by bad fan motor or dirty filters. When the air is not passed over the evap coil, no heat exchange took place. The cold refrigerant froze the moisture in the air to the coil. With enough air across the coil the temp of the coil should be just below the dew point. The moisture in the air will condense on the evaperator coil, fall into the drip pan and out a drain. Check the filter and the air flow over the coil and see what you find. If that's not it, there are other things it could be still. Keep us posted.