Because drag-and-drop works in the new user account but not in the original account, the problem appears to be associated with something in the original account.
This does not identify the specific cause.
I would continue troubleshooting the original account rather than reinstalling macOS.
Restart the Mac and test dragging between Finder folders and from Finder to the Desktop.
If it still fails, relaunch Finder by holding Option, Control-clicking the Finder icon in the Dock, and choosing Relaunch, then test again.
Next, go to System Settings >> General >> Login Items & Extensions and temporarily disable non-Apple login items and background items.
Restart and test again. Apple: Open Login Items & Extensions settings
Also test drag-and-drop in another Apple application or location where it is supported.
If it works there but not in Finder, that narrows the investigation toward Finder or the Desktop.
If it fails elsewhere as well, another component of the original account may be involved.
If the problem persists with third-party login and background items disabled, run EtreCheck while logged into the original account.
This is a Diagnostic Tool that makes no changes to the computer.
It makes a coherent and readable inventory of both the Hardware and Software used on the computer
The application is free or paid for added features.
The Report will Not Reveal Any Personal Information.
Post back the Full Report - Share Report >> Copy , then paste >>>> using the Additional Text Icon <<<<
Its report can help identify third-party software, extensions, login items, and background processes that may differ from the new account.
At this stage, I would not delete Finder preferences, caches, or other system files.
First identify whether Finder itself, a third-party component, or another account-specific setting is involved.
If the cause cannot be identified, the functioning new account can also serve as a temporary workaround or, if necessary, the basis for migrating your work to a clean account.