I have exactly the following issue with Ubuntu 17.04 (Gnome shell and desktop installed)
When clicking on the Bookmark root or on one of the bookmarks below the mouse cursor gets stuck in "drag n drop" mode, blocking all keyboard entry and also mouse clicks for the the whole GUI (systemwide).
It`s a very old issue but without any concrete solution.
And happen not only in nautilus, others applications like
Notes and others are affected. In many places of these applications a simple click stuck in "drag & drop" mode, is impossible to work with this problem, is very annoying.
Any idea or solution is welcome.