The problem is still evident for me (the bug originator). However, the
behaviour has changed slightly after recent updates to the kernel,
nvidia driver (169.12+2.6.24.12-17.35), and nautilus (1:2.22.2-0ubuntu5)
- although I know not which package caused the change. The original
problem is still 100% reproducible except that now the X session crashes
after being near deadlocked for ~ 5 seconds. Before the near deadlock
would continue indefinitely.

FYI, I am using the "pink shadow" fix (as described here:
http://tombuntu.com/index.php/2008/04/28/workaround-for-pink-shadows-
with-compiz/), but the bug still occurs with and without it. I only
mention this b/c is is a change to the default install of the nvidia
drivers.

-- 
Compiz/Nautilus Freeze on Icon Drag
https://bugs.launchpad.net/bugs/224360
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