Oh my god... I remember having this EXACT same problem that pissed me off to no end. I FINALLY figured it out. If I am understanding you correctly, Make sure you have the latest .NET Framework from Microsoft.com installed. When it happened to me, Media Manager wouldn't work, and when I tried to drag a clip to the timeline, it would just show my cursor as a circle with a line through it. Just give that a try I'm sorry if I missunderstood you and got your hopes up (if it doesn't work, that is.) Good luck!