How to Enable Cut and Paste

When you open Remote Desktop Connection, before connecting, click on Options. When Options opens, use the local resources tab and enable Clipboard and Printer.

If you don't see what I am describing please get the latest version of RDC.  Or look around your options tabs as the function may be somewhere else.

Here is a link to the Remote Desktop Connection update for Windows XP from Microsoft:
http://support.microsoft.com/kb/925876 
alternate link:
www.icanotes.com/WindowsXP-KB925876-x86-ENU.exe 

Windows 2000 Remote Desktop software 
alternate link:
www.icanotes.com/msrdpcli.exe