This problem has been presented numerous times on Expert's Exchange, but I can't find a satisfactory answer, so I'll bring it up again. I work in the IT dept. of a school district and we have many computers that exhibit this same problem. Re-installing Windows is an option, but because of the number of computers we support (over 5,000), it is not the best option. I hope that there is a fix that is simpler and quicker.
There are two symptoms, but I suspect that they're caused by the same thing.
1. The icons cannot be moved around on the desktop. When you click & hold the icon and try to drag it to a different location it doesn't move. This is NOT a problem with Auto Arrange. The icons don't follow the mouse cursor and then jump back to their original position. With this scenario, the icons DO NOT move at all. It does the same thing if you try to drag & drop files in Windows Explorer....the files don't move at all.
2. The Paste feature does not work in Windows Explorer or on the desktop. When you Copy or Cut a file or icon, (or multiple files or icons) and then try to Paste them in a different location, the Paste and Paste Shortcut features are both grayed out.
We've applied updates (including the OLE update), tried different video cards & drivers, different mouse & drivers, etc.
NOTE: We don't have these problems in Safe Mode, but we do have them in Normal Mode and in Safe Mode with Network Support. Also, the Paste feature works OK in applications such as Notepad and WordPad.
OK, impress me......