Why is my text tool greyed out in Preview

The most common reason for this is the pdf containing an image of the text, and not actual text.

How were the pdf created?

If you have a different pdf that you are sure contains text, does the selection work on it?

That would reinforce the suspicion that the above is the reason.

For example, if you take a word document, and save as pdf from word, you should be able to do text selection in that pdf.

Maybe it has to do with how the PDF was created?

Try a different PDF, of known origin or that you know you can select text and test.

Try the adobe acrobat reader.app as an alternate test

Select and copy text in a PDF in Preview on Mac - Apple Support

How to edit images and mark up PDFs with Preview on your Mac - Apple Support

Try setting up another admin user account to see if the same problem continues. Please post back on whether or not this worked. Also try the Safe Mode. Please post back on whether or not this worked.

Isolating an issue by using another user account

Safe Mode - About

Safe Mode Startup – El Capitan. also Sierra

If it works in the Safe Mode, try running this program when booted normally and then copy and paste the output in a reply. The program was created by Etresoft, a frequent contributor. Please use copy and paste as screen shots can be hard to read. Click “Share Report” button in the toolbar, select “Copy to Clipboard” and then paste into a reply. This will show what is running on your computer. No personal information is shown.

Etrecheck – System Information