I cant drag any items / footage from the project window into  the time line

That's not ideal. Sorry to hear about the issue. Are you on macOS or Windows? Before resetting the preferences, can you try running After Effects in Safe Mode? If it works in Safe Mode, then resetting the preference should help.

Let us know how it goes. Moving this thread from Bugs to Discussions for troubleshooting.

• Reset workspace
  Window → Workspace → Reset “Default”

• Disable hardware UI acceleration
  Edit → Preferences → Display → uncheck Hardware Accelerate… → restart AE

• Reset prefs
  Hold Ctrl + Alt + Shift while launching AE → confirm

• Roll back to 25.5 (most stable)
  Creative Cloud → AE → … → Other Versions → install 25.5.x