I have been having a problem selecting objects in Illustrator. I am only able to select boxes and type by clicking directly on the path with both the selection and direct selection tool. Normally I can select text by clicking anywhere on it. I have checked my selection preferences and have the "Object Selection by Path Only" box turned off. I'm not sure what would be causing his problem.
I think you may have to try what I'm about to try - resetting the Prefs - delete the Preferences folder and let Illustrator rebuild it when you restart it.
I can't get the Arrange commands to run - only thing I can think to try is resetting the Preferences...it usually clears up strange glitches like yours and mine.
[edit: Well resetting the Preferences did nothing for me. Hope you found a solution to your problem]