I've had this issue for a while and was annoyed cause I like to have my shortcuts in All Programs menu (Start>All Programs) in specific order to my usage but always got the stupid Red No crossed circle icon.
At first I thought it may have been a bug as I can't add new shortcuts to the All Programs without using a workaround but then it hit me, in windows XP there is a option to prevent drag and dropping of context menu items, but I checked and hmm it is checked.
The solution is:
The sorting option of the All Programs is set to be sorted by alphabetical order of program names.
to fix disable that option.
- Start > All Programs
- Right-click in white space > Properties
- Next to start menu radio button click the [customise] button
- Scroll down to bottom of list and de-select "Sort All Programs menu by name" checkbox
Now try to move around and re-order your shortcuts.
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