I was developing some custom control and started getting this problem suddenly. While trying to figure it out, I realized that it was [TooboxItemAttribute] that was causing problem.
In my case, I was developing one base WebControl and one child webcontrol derived from base. I didn’t wanted to display the base webcontrol in the toolbox, so I set the [TooboxItem(false)] in the base webcontrol. In child webcontrol it was set to [ToolboxItem(true)]. After setting this ToolboxItemAttribute class, I started facing the problem and I was not able to drag-n-drop the control over the designer.
After I removed the [TooBoxItemAttribute] from both the webcontrol classes, the problem was gone and I was again able to drag-n-drop the controls.
It’s really pethatic that there is no help available for this error and error message doesn’t reveal any information to crack this problem.