Eclipse - How to use Palette in layout

[Bob Cheese]

I am very new to Android development.
I have just loaded Eclipse with the ADT Plugin and succesfully run the Hello World example.
I am just trying to play around with Eclipse a little and am stuck trying to use the Palette to add objects such as a button.
I have nagivated to the layout/main.xml and am trying to drag a button from the palette to the form, but not having any luck in making it work.
Can anyone suggest to me what I am doing wrong or not getting here?