Unable to move pixels from Photoshop into Illustrator

On Mac, running Sonoma. I am unable to move/drag layers from photoshop into illustrator. Beforehand, I could easily just have any layer/layers selected in photoshop, and use the move tool to drag from photoshop directly into illustrator. I loved being able to do this, espeically with layers that had transparent backgrounds because I could layout text around graphics in illustrator (it's much easier to do typography in illustrator) and then paste them as smart objects back into my photoshop file. Now, when I drag into illustrator, nothing happens, not even a blank broken linked image. Now, I can still make a selection in photoshop and copy paste into illustrator, but I have to first flatten the image (I typically work in many layers on photoshop), and I run the risk of accidentally forgetting that I've flattened my photoshop image and losing my layers and ability to edit. So much easier when I didn't have to merge, copy and paste. Any thoughts as to why this ability has been removed? I even tried reverting back to previous versions of both photoshop and illustrator.