It may be too late to help the original contributors to this thread, as this is an old story. But the problem, in one form or another, still comes up, as I recently found. After extensive troubleshooting, I remembered a solution - though I never found the root cause of the problems. I post my answer here now so that others coming late to this forum, as I did, will have another solution to try.
I have a friend who was having much the same trouble on her MacBook Pro running OS X 10.6.8 Snow Leopard as described on this forum. She could not drag & drop files - though she could move windows around by the title bar, so it was not a malfunction of the click-hold function of the trackpad. The same problem accrued when using a mouse. In addition, copy and paste did not work - or, more accurately, past did not work. The Copy function was still available in the Edit menu, while Paste was always grayed out.
Further, no application showed the fonts in her user Fonts folder - even after repairing ACSs. I installed the old, free version of Linotype Font Explorer and, as with Font Book, the user fonts were not shown. Or rather, they were listed but displayed as not available. In Font Book they didn’t show at all. Nor were they available in Photoshop or Illustrator.
None of the standard repair procedures made any difference, not even Disk Warrior. The temp folder, as described in other posts, was extant. But repairing permissions on that folder didn’t help. After creating a new admin user account the problems were still there. However, when I booted from an external hard drive with a separate copy of OS X, none of the problems showed up. I concluded, from all this, that the source of the trouble was not a hardware problem or a flaw in her user account. It was some kind of corruption in the main system somewhere.
A common restorative, reinstalling the OS X 10.6.8 combo update, didn’t work in this case. But before defaulting to the last resort solution of doing a clean install, I remembered that reinstalling the base OS, in this case OS X 10.6.0, over the existing system was occasionally effective in fixing obscure problems. It has the added advantage of not requiring reinstalling applications, recreating accounts and settings, or migrating data from a backup (though I did do a clone back up of her system using SuperDuper! as a precaution). Fortunately I had an OS X Snow Leopard install disc on hand. The only caveat is that I had to use an external DVD drive to boot from the disc as Snow Leopard came on a dual layer DVD - and the optical drive on her old MacBook Pro doesn’t support dual layer DVDs.
Well, this turned out to be the right solution. I updated to OS X 10.6.8 once more and the system was as good as new. Thus two days of grueling troubleshooting had a happy ending.