This is definitely a pain especially when someone, in our case Janne and others, has gone to the trouble of providing a great text editor.
This is what I've done to fix for XP; Firefox 0.8; (default user profile)
1. Shut down browser
2. Find "prefs.js" I found it at:
-> My Computer -> C: -> Documents & Settings -> your Windows profile -> Application Data -> Phoenix -> Profiles -> Default -> *****.slt -> prefs.js
3. Make a backup copy of prefs.js and store in a safe place
4. Add these lines to the bottom of the prefs.js file
user_pref("capability.policy.allowclipboard.Clipboard.cutcopy", "allAccess");
user_pref("capability.policy.allowclipboard.Clipboard.paste", "allAccess");
user_pref("capability.policy.allowclipboard.sites", "http://moodle.org");
user_pref("capability.policy.policynames", "allowclipboard");
4. Save this file
5. Open Firefox and try to use copy and paste. If this doesn't work check your prefs.js file to confirm the changes you've just made. If not, well, try try again...
NOTES:
Browser must be closed before making changes as browser will save prefs.js on shutdown and your changes will be neutralized.
Windows uses prefs.js
I haven't been able to add multiple sites to the "allowclipboardsites" so if there's a way please share your method, thank you.
If anyone can add further to these instructions please do as this can be a very frustrating procedure and concise, accurate documentation will be much appreciated by many.