When working under the location tree I have noticed a couple of quirks with Cut/Copy and Paste.
Say you have the following structure:
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C:\ Music Artist Directory1 Directory2
Select Artist, right click and paste will be greyed out.
You can however drag and drop Directory2 onto Artist to get the desired result. I would expect that paste should work as well.
Select a directory in the tree, right click and select cut or copy.
Got to a different directory in the tree. Right click and see if you can paste (you don't have to actually do the paste).
Quite often paste will be greyed out. If you go back and select cut or copy again paste is no longer greyed out. This happens quite often and is quite easy to reproduce.