How to ACTUALLY get widgets working…
If you are having trouble installing widgets (and there is a good chance you are because the online documentation is limited and inaccurate) here’s a brief explanation to get you through this interesting process. First of all, you will need WordPress 2.1 which you can find here. Next you will need the most up to date (presumably) version of the widgets plugin which can be found here. Extract the zip files to somewhere you will easily find them again and upgrade your WordPress software with the upgrade.php file which is explained in the readme file in the WordPress 2.1 folder that you just extracted.
Installing the Widgets plug-in
Now drag the widgets folder you just extracted to your /wp-content/plugins folder. Now go into your administration panel (dashboard) click plugins and click on activate for the widgets plug-in. Then go to your ‘Presentation’ tab click widgets and try to drag your widgets to the box. If it worked, hooray for you, you can go take a brief nap with the time you saved. If your like me and your widgets wont drag or you are having any other issue, then sadly you must continue reading.
Fixing what’s broke
Look in your /wp-includes folder you should see a folder named ‘scriptaculous’. If it’s missing, download this zip file and extract the contents and put the scriptaculous folder into the previously mentioned directory.
Now go into your /wp-includes/js directory and see if there is a scriptaculous folder here. If not, download this zip file and put this scriptaculous folder in there.
*NOTE: these are 2 different folders named the same thing don’t just copy one and put it in both places or your widgets WONT WORK*
Finally, in the /wp-content/plugins/widgets folder open the widgets.php file and find this line of code (line 203):
wp_enqueue_script( 'scriptaculous-dragdrop' );
and add this line right below it:
wp_enqueue_script( 'scriptaculous-effects' );
If you don’t feel like doing that, you can download yet another file here called widgetsPHP.zip and drag the contents of the zip folder (widgets.php) to your widgets folder and click overwrite when prompted.
If it still doesn’t work than you likely didn’t follow the directions laid out here (and from WordPress for the installation/upgrade) exactly. Try again and hope for the best.