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It gets weirder! In the meantime I discovered there was a new release of XYplorer, which I installed. Checked if it made any difference - still got the same error message. As I mentioned I had previously set the executable to run as an administrator to see if that would solve the problem and found it made no difference. I removed the run as admin option and - guess what - drag and drop of the file into an XYplorer window is now working again as it should. Explain that!!