I figured out what was causing the disabling of the swatch and color pallets, last week in Win7, I got a new 30" monitor and changed the display preference to "Larger 150%" in control panel/display. For some reason this totally disables the swatch and color pallets.
We firgured this out when my IT support guy connected to my computer it changed the resolution to that on his screen and it worked when I was showing him what was going on. I remembered that I had changed the resolution .
Thanks for all your help Peter!
I'm surprised you didn't report the other usual symptoms of large fonts. That, or mentioning Windows 7 early on woud probably have gotten you a referral to InDesign tools and panels don't respond to mouse clicks (Windows 7/Vista) and the solution a little faster.