Comment 58 for bug 79289

Hm, it works as intended for me on Ubuntu 7.10.

Seth, perhaps it's just delayed reaction? I get similar problems when dragging music from Rhythmbox to my Desktop, for example. Sometimes you just have to wait a few seconds longer for the cursor to change (that indicates you can now move/copy the item).

Note: my experience is with X.org, i've turned off both Xgl and desktop effects. This could be important.