I found an exelent write up on Terminal Services Team Blog titled Why does my shared clipboard not work?
I used to have an issue where my clipboard would stop working. I would eventualy have to reboot my computer to fix it. I would work with remote desktop alot and the mstsc was the cause of my problems. That write up explains exactly how the clipboard would lock up.
I uncovered a program that would show me the process containing the lock and allow you to kill it. I would love to link that program, but I cant track it down. I did find another one that a microsoft MVP posted that I think does the same thing. Here is a copy of that post.
This has to do with some application that's having a lock over the Windows Clipboard. David Candy's application should determine the Process that's causing the problem. Download GetOpenClipboardWindow.zip from here: http://windowsxp.mvps.org/temp/GetOpenClipboardWindow.zip Unzip and run the tool. Post back what it reports. For best results, run this utility during the time you encounter the Copy<=>Paste problem.
-- Ramesh, Microsoft MVP
Windows XP Shell/User
In the end, upgrading to the RDP 6.0 client also fixes this problem in mstsc. Now that I have upgraded it, I no longer have this issue.