It seems to be a problem of core/palette. The menu from Add button
attempts to set a selected item through PaletteUtils.selectedItem()
that calls PaletteController.setSelectedItem().
Unfortunately this invocation is not successful. The problem seems
to be in DefaultModel.findCategory() method. The method is not able
to find a correct category:

catNode.equals(node) is false, because the node is DataFolder$ClonedFilter
and catNode is CategoryNode. Note that catNode.original.equals(node) is true.

For the sake of completeness - the Add button can be displayed using context
menu on the form toolbar.

fixed

Checking in src/org/netbeans/modules/form/palette/PaletteUtils.java;
/cvs/form/src/org/netbeans/modules/form/palette/PaletteUtils.java,v  <-- 
PaletteUtils.java
new revision: 1.19; previous revision: 1.18
done

===================================================================
RCS file: /cvs/core/palette/src/org/netbeans/modules/palette/RootNode.java,v
retrieving revision 1.6
retrieving revision 1.7
diff -u -r1.6 -r1.7
--- RootNode.java	23 Aug 2005 14:10:15 -0000	1.6
+++ RootNode.java	12 Oct 2005 10:18:16 -0000	1.7
@@ -64,6 +64,7 @@
         if( null != df ) {
             content.add( new DataFolder.Index( df, this ) );
         }
+        content.add( this );
         setDisplayName(Utils.getBundleString("CTL_Component_palette")); // NOI18N
     }

Verified 200512192030