Shared Folders Greyed out and will not drag and drop Ubuntu 10.04

I fired up my VMWare Fusion 2.0.1 (which I usually use to test webpages with IE under XP) and installed Ubuntu 10.04.

Seems to work fine except the shared folders are greyed out and I cannot drag and drop.

Installed VMwareTools-7.9.3-128865 and that seemed to go well.

1) Install VMware Tools from the Virtual Machine menu.

2) Extracted to the desktop.

3) From Terminal

cd /Desktop/vmware-tools-distrib

sudo ./vmware-intall.pl

follow prompts

There are a few warnings but it looks OK.

I can go to the Add Shared Folders but in the Sharing settings they are greyed out.

And I cannot drag and drop.

This is a Leopard Mac.

Is there a step I am missing.