I'm having basically the same symptoms now when I try to use drag-n-drop with multiple files using 1.3c build 1446. The files are downloaded to the temp directory, and the program goes into a loop where it repeatedly tries to download the same file, etc.
Also, this may be unrelated, but even with single file drag-n-drop transfers, the transfer is truncated at about 16K, though CoreFTP reports the transfer was successful.
Here's an example...