Thanks for your bug. What version of Ubuntu do you use? That seems to work fine on my edgy desktop. Does pressing "Esc" close the dialog and unlock your mouse pointer?
** Changed in: nautilus (Ubuntu)
Assignee: (unassigned) => Ubuntu Desktop Bugs
Status: Unconfirmed => Needs Info
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Gnome desktop mouse action freeze on folder drag /open
https://launchpad.net/bugs/48815
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