Shortcut; Drag and Drop failure

I have a problem with one of my Windows 2000 computers that I haven’t been able to fix. After a reboot I can no longer run any shortcuts. Double clicking gives a brief hourglass then nothing. Browsing to a shortcut and running it from the Run command or a command prompt gives an access denied error. I can run the shortcut targets directly. Also, I’m unable to drag and drop items. There appears to be a very brief ‘ghost’ as I begin to drag the first time but that’s it.
I have found several links about lost lnk file associations but my registry seems to be correct and applying a registry fix doesn’t help.