I really think now it was my internet connection. I was using my laptop and I noticed I had a weak signal when I had the upload issues. My signal is strong again and no problems since! My pop up blocker has never caused an upload problem.
I do think the drag & drop uploader isn't working because of the ActiveX thing. I tried turning it off, doing what you said about the control key but nothing works. I was told that a service ticket might be the best way to resolve it.
So for now, I'll continue to use the HTML uploader until I can get the other to work. Hope you can get things working on your end too!