Often an easy trick is to go to LW's prefs, iTunes > Sharing & untick option for iTunes to import, press apply. Then tick again & press apply again. You may need to re-open both programs for it to take effect.

As for iTunes freezing. I am not sure. And why the drag & drop is not working I am clueless. I am also having problems with iTunes. Permission errors, since i keep both the program & library on an external disk. Recently i was forced to abandon my user account due to corruption & set up another. Despite changing permissions of all concerned, I am unable to access the library, in fact even without the external connected, it says unable to access due to permissions or a locked disk & the program closes. Frustrating!!! I am going to post about this on the iTunes forums. You might be wise too. I have a suspicion it is related to the newer version iTunes or some type of security apple have added in their OSX updates. I am unable to access my iTunes library in any user account or even Panther which is also installed on another drive. iPod Forum (Check the different sections ... there's one specifically for mac osx iTunes !)