Post from Social Technet:
"This issue came up on my Win7 32bit professional recently. It worked before.....
After spending hours searching for an answer online somewhere, and got NADA FROM 50 FORUMS......
MOST if not ALL memory management software WILL clear the clipboard queue every time it engages..and it does so very often..in seconds usually. Check to be sure you do not have any kind of memory management or RAM MANAGER type of software loaded.
In my case it was Advanced System Care 5 from IOBIT software...LOVE THE SOFTWARE on Win 7..speeds everything up and clears out all the BS Miscosoft stuff running at boot... almost completely. But you have to go into its config to tell it to ignore the clipboard cache when it does it's memory management tasks. Otherwise it kills copy/paste functionality totally".
If this is no help you may have to run a repair install of Windows 7
http://pcsupport.about.com/od/toolso...tup-repair.htm