If it's PhotoShop, this is caused by doing an Upgrade installation or an Archive & Install installation of Mac OS X over a previous version of Mac OS X. This is the fix: http://www.adobe.com/support/techdocs/329996.html
If it's some other file or application, please specify.
Thanks for the reply. It's not just Photoshop. If I try to drag any file, Illustrator, text file, Word file, etc., the icons on the dock won't even highlight.