Hi @Paul ,
Make sure that the Outlook window is active and press the ESC key several times.
This might also happen if certain Outlook folders are corrupted which causes the problem with drag & drop.
Close your Outlook.
Launch the Run command
Type the following command: outlook.exe /resetfolders and click OK to execute it. This should repair the default Outlook folders and restore the drag & drop capability.
Restart the PC after this and see if this helps you out.
Besides, I noticed that your outlook version is not the latest, some problems may be resolved after the update, it is recommended that you upgrade to the latest version.
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