Hi Xman,
It's easier than you might think, but not immediately apparent. Simply point your mouse pointer in an empty space of the Windows font directory, right-click, and select "Install New Font." You'll be able to browse to the directory containing the font you wish to install, select it, and install it.
If you're using an application (such as Photoshop) that uses the font, you'll probably need to reinstall the application to see the new font in the application's font list.
As to why the font drag and drop doesn't work anymore? Probably a security issue...for those that are overly annoyed with all the Vista problems...stay tuned for Windows 7 - we've heard it's much more streamlined and efficient, and shouldn't have as many installation and compatibility issues.