Bug: 4.0b Beta 2: Favorites broken: can't nest folders or drag anything into a folder for that matte

See http://community.logos.com/forums/p/8964/71724.aspx#71724 for the initial report of this bug, but I thought it deserved to get elevated attention by having its own thread.

My Favorites that I had before (including nested folders) are intact, but I cannot drag anything new into any existing folders. I can create new folders, and drag things into the empty space below all the folders, but that's it. If I click Add, it puts the current down at the bottom of the list (shouldn't it put them inside the currently selected folder? I can't remember how it used to work previously).