FULL PRODUCT VERSION :
java version "1.7.0"
Java(TM) SE Runtime Environment (build 1.7.0-b147)
Java HotSpot(TM) Server VM (build 21.0-b17, mixed mode)
(Occurs on all versions from 1.6.0-23 to present)

ADDITIONAL OS VERSION INFORMATION :
Ubuntu 10.04
2.6.32-34-generic #77-Ubuntu SMP Tue Sep 13 19:40:53 UTC 2011 i686 GNU/Linux

A DESCRIPTION OF THE PROBLEM :
Identical bug described in the following ticket.
http://bugs.sun.com/bugdatabase/view_bug.do?bug_id=7027598
The ticket was incorrectly marked as "Not a Defect" and was closed. The bug continues to persist.

REGRESSION. Last worked in version 5.0

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
The bug can be reliably reproduced using test code submitted by cptn_carrot in ticked 7027598.

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
No exception thrown.
ACTUAL -
Exception thrown

ERROR MESSAGES/STACK TRACES THAT OCCUR :
Exception in thread "AWT-EventQueue-0" sun.awt.X11.XException: Cannot write XdndAware property
at sun.awt.X11.XDnDDropTargetProtocol.registerDropTarget(XDnDDropTargetProtocol.java:79)
at sun.awt.X11.XDropTargetRegistry.registerDropSite(XDropTargetRegistry.java:554)
at sun.awt.X11.XWindowPeer.addDropTarget(XWindowPeer.java:1633)
at sun.awt.X11.XComponentPeer.addDropTarget(XComponentPeer.java:1509)
at java.awt.dnd.DropTarget.addNotify(DropTarget.java:493)
at java.awt.Component.addNotify(Component.java:6687)
at java.awt.Container.addNotify(Container.java:2567)
at javax.swing.JComponent.addNotify(JComponent.java:4685)
at java.awt.Container.addImpl(Container.java:1068)
at java.awt.Container.add(Container.java:365)
at TestFrame$1.run(TestFrame.java:34)
at java.awt.event.InvocationEvent.dispatch(InvocationEvent.java:209)
at java.awt.EventQueue.dispatchEventImpl(EventQueue.java:641)
at java.awt.EventQueue.access$000(EventQueue.java:84)
at java.awt.EventQueue$1.run(EventQueue.java:602)
at java.awt.EventQueue$1.run(EventQueue.java:600)
at java.security.AccessController.doPrivileged(Native Method)
at java.security.AccessControlContext$1.doIntersectionPrivilege(AccessControlContext.java:87)
at java.awt.EventQueue.dispatchEvent(EventQueue.java:611)
at java.awt.EventDispatchThread.pumpOneEventForFilters(EventDispatchThread.java:269)
at java.awt.EventDispatchThread.pumpEventsForFilter(EventDispatchThread.java:184)
at java.awt.EventDispatchThread.pumpEventsForHierarchy(EventDispatchThread.java:174)
at java.awt.EventDispatchThread.pumpEvents(EventDispatchThread.java:169)
at java.awt.EventDispatchThread.pumpEvents(EventDispatchThread.java:161)
at java.awt.EventDispatchThread.run(EventDispatchThread.java:122)

REPRODUCIBILITY :
This bug can be reproduced often.

---------- BEGIN SOURCE ----------
import java.awt.Container;
import java.awt.EventQueue;
import java.awt.Window;
import java.awt.peer.ComponentPeer;
import java.lang.reflect.Field;
import java.lang.reflect.Method;

import javax.swing.JDialog;
import javax.swing.JFrame;
import javax.swing.JTextField;

import sun.awt.X11.XBaseWindow;
import sun.awt.X11.XToolkit;


public class TestFrame extends JFrame {
public static void main(String[] args) throws Exception {
EventQueue.invokeLater(new Runnable() {
public void run() {
TestFrame frame = new TestFrame();
frame.pack();
frame.setVisible(true);
JDialog dialog = new JDialog(frame,"title",true);
Container content = dialog.getContentPane();
dialog.pack();
JTextField text = new JTextField("bla");
// generate X Error directly before adding the textfield
generateXErrorSafe(dialog);
// with the next call the dialog is activating itself as DropTarget for X
content.add(text);
// the next two lines are never reached
dialog.pack();
dialog.setVisible(true);
}
});
Thread.sleep(8000);
System.exit(0);
}

static void directResize(long windowId, int w, int h) {
try {
XToolkit.awtLock();
Method xresizeWindow = Class.forName("sun.awt.X11.XlibWrapper").getDeclaredMethod("XResizeWindow", long.class, long.class, int.class, int.class);
xresizeWindow.setAccessible(true);
xresizeWindow.invoke(null, new Object[]{getXDisplay(), windowId, w, h});
} catch (Exception e) {
throw new RuntimeException(e);
} finally {
XToolkit.awtUnlock();
}
}

static long getXDisplay() {
try {
Method getDisplay = XToolkit.class.getDeclaredMethod("getDisplay");
getDisplay.setAccessible(true);
return (Long)getDisplay.invoke(null, new Object[]{});
} catch (Exception e) {
throw new RuntimeException(e);
}
}

static long extractWindow(ComponentPeer peer) {
try {
Field field = XBaseWindow.class.getDeclaredField("window");
field.setAccessible(true);
return (Long)field.get(peer);
} catch (Exception e) {
throw new RuntimeException(e);
}
}

static void generateXErrorSafe(Window dialog) {
ComponentPeer peer = dialog.getPeer();
long windowId = extractWindow(peer);
int w=Integer.MIN_VALUE;
int h=Integer.MAX_VALUE;
for(int i=0;i<5000;i++) {
directResize(windowId, w, h);
}
}


}

---------- END SOURCE ----------

CUSTOMER SUBMITTED WORKAROUND :
start the VM with "-DsuppressSwingDropSupport=true"