iPod Classic drag and drop wont work but sync will

I have an issue that doesnt seem to be covered by any other answers on here as yet.

I have a 30GB iPod Classic that was working absolutely fine up until the recent iTunes updates. The problem is the lack of drag and drop with the classic. The sync function will work fine, but the "drag and drop" when switched to "manually manage" fails to work. I have tried to quit iTunes, check for updates, and even reset the iPod completely.

I had a similar issue with the iPhone but it was resolved immediatley when the "manually manage" box was ticked. For some reason it will not recognise this method at all with the classic.