I do not think that a retracted article can be treated the same way as a never-published article and simply not listed, because the article still appears in the literature (and may even attract citations), just with a "retracted" mark on it. As such, anybody who looks you up may come across it and wonder whether you are attempting to conceal the retraction.
I thus think that it would be better to include the article in the CV, and think it would be best to include a short note (no more than one line) stating the general circumstances of the retraction as neutrally as possible. As for which section, I can see arguments in either of two directions:
- Including it with the rest of the articles of the same type is reasonable because it's also an article, but problematic because it may look like it is trying to hide amongst them.
- Placing it in a separate section is reasonable because it makes the distinction clear, but is problematic because it highlights the retraction.
As such, if I were dealing with this myself, I think that I would choose to place it in its own section, but put that section as late as possible, where the reader has been exposed to lots of good things before they come to the bad.