Problem dragging files to shortcuts

I have Windows XP Professional, sp1

When I try to drag data files from Explorer to a shortcut to any app on the
desktop, it won't work. As soon as the filename is over the icon, the "not
allowed" symbol appears on the cursor (circle with a line thru it).

This just started happening yesterday. It happens for any data file and for
any shortcut to any .exe file. For example, it happens when dragging a .TXT
file to a shortcut to NOTEPAD (I CAN sucessfully drag files to a FOLDER
icon)

Thanks in advance,
nwells