Yes Susan, there´s something wrong. The systems tell me: error loading the applet. Applet dragmath notinited.
A demand to the DragMath (not the moodle) files. Susan can you please take a look on your server under the following path:
Is there inside a folder called DragMath? //edit yes i saw it, there is inside //
And one question more, did u want make both (the dragmath and the smileys) available?
P.S. Please anable the tex filter in your administration->filter