Bidirectional drag'n drop is not working with VirtualBox and ubuntu 14.04

"Drag and Drop" was introduced with the guest additions in Virtual Box 5.0. with some limitations:

At the moment drag and drop is implemented for Windows- and X-Windows-based systems, both, on host and guest side. As X-Windows sports different drag and drop protocols only the most used one, XDND, is supported for now.^{VirtualBox Manual}

In addition to that only drag & drop of simple text, or files and directories of the file manager not running with administrative permissions is supported.

Preliminary experimental versions of Virtual Box "Drag'N'Drop" to a Linux guest only were introduced in version 4.2 .

According to the Release notes: https://www.virtualbox.org/wiki/Changelog-4.2

"Added experimental support for Drag'n'drop from the host to Linux guests. Support for more guests and for guest-to-host is planned."

I did not see any newer release notes indicating that status had changed.

So, Drag 'n' Drop will only work 1 way. Try enabling only "host to guest". Also, because of this reason it may be more efficient to just use a shared folder and move files back and forth that way.

Have you done

sudo apt-get install virtualbox-guest-dkms

to ensure that virtualbox doesn't break after kernel updates?