This bug has been added to the tracker:
Issue 721 – Cannot drag&drop files from local file panel

I have emailed you a fixed version for testing.

Hey,

I have a similar problem trying to transfer an image from my Desktop, I was trying to transfer sprite.png and it got stuck trying to copy skto (middle of Desktop?)

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Thanks

Thanks for your post. I'll contact you soon.

When dragging and dropping from the local pane to the remote pane with the new beta, WinSCP seems to somehow get mixed up as to the name of the local file, and as a result gives a "can't find file to upload" error. This happens when Unicode filenames is On, Off, and Auto. The local directory I'm uploading from is a little strange (it's "in" a symlink inside a folder mounted as a fake drive letter) but using its canonical location yields the same result so I don't think this is the problem. I'm running Windows 7 x64.