It might be the case, this was changed 4 and half years ago:
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Are you talking about Explorer mode, which I never use but which I see does work?
The selection rectangle disappears once you release the mouse. But the files selected using the rectangle should stay selected. Note that you have to extend the rectangle to the Name column of the panel to select the files.
prikryl, are we supposed to be able to select two or more files with the mouse in the first place?
I see the encapsulation window, but then it just disappears as soon as I let the mouse button go. I never understood the point of that. If multi-file encapsulation isn't possible (without holding down a key), then why show the expanding window at all?