Seems rdpclip.exe misbehaves occasionally, preventing use of the "copy" function (via Ctrl+C or menu) in Windows or Office 2003

The temporary solution seems to be to kill the rdpclip.exe process. To do this go to the Start button and click Run. Then type

taskkill /F /IM rdpclip.exe

There is a hotfix for Windows 2003 server to prevent this, but in this instance there was no connection to a Win 2003 server, it was a Windows XP computer that was acting as the server being connected to.