a) Redownload WordPress 2.1. Extract the wp-includes/js/scriptaculous/* files from there and put them where they belong (that same directory). Moving them around will *break the blog*, so don't do that.
b) Download the latest widgets code (1.2.1a or something like that). Put it in wp-content/plugins/widgets/widgets.php.
c) Download this file and put it in wp-includes/js/scriptaculous/wp-scriptaculous.js . It was a missing file in the original 2.1 release. Lack of it might cause issues.
d) If you have *any* scriptaculous stuff in the widgets directory, delete it.
e) While looking at the widgets page, hit CTRL-F5 to refresh your browser. Might also want to clear the browser cache beforehand.