On my Envy running 11.10, when I left-click and try to drag using the touchpad, the context menu instead pops up, as if I had right-clicked. Additionally, right-clicking does not bring up a context menu.
My touchpad settings are as follows:
General
Disable touchpad while typing (yes)
Enable mouse clicks with touchpad (no)
Scrolling
Two-finger scrolling
Enable horizontal scrolling (no)