ernievh3,
My daughter finally remembered to try your suggestion but it did not solve the drag n drop problem for her. She did spot another compatibility setting while she was doing the operation. It was set to WinXP SP3 and she changed that to Win7 which is what she's running and rebooted the vm just in case. Didn't change anything. Still no drag n drop on any of the sides of the vm screen.
Thanks for trying.
Dave