Ok using the gluedideas theme which mention that there will be issues with the built-in widget system.
Thus i changes to a different theme. Theme appears correctly as how it should it be. All plugins are off.
Now when i open the presentation->widget, i cannot drag-drop the widget elements to the sidebar above.. nor can i bring any widgets that are already there on the sidebar.
Now using this plugin i turned off the built-in sidebar widget. I activated the Automatic Sidebar Widget for WP2.1, which activated without any issues.
I return back to presentation-sidebar widget. Loads fine, but exact same issue. I cannot drag-drop the widgets.
Any ideas on this ? As it's messing with me since upgrading to 2.2.3