This is what happens
You're dragging to the Program monitor, which means you want to add the clip to your sequence. The "add clip to project" is slightly different - it adds the clip to your project without placing it on a sequence.
There are built-in shortcuts to add clips to a sequence; those are the period (overwrite) and comma (insert). I noticed in the screenshot of your OP that the period key is no longer assigned to that default overwrite function. Did you unassign it yourself? Also, I noticed your shortcuts layout preset is set to "TRIAL" - is that a preset you created? If you select the default Premiere Pro preset it should restore the period/comma key shortcuts.