I can't create a new folder on the desktop and this error message appears. I also can't drag images or files to the desktop or hard drive folder. How to solve?

If rebooting your Mac doesn’t fix things, see if the problem still happens in Safe mode (hold the shift key down at startup). It can take much longer to safe boot (10 min) so be patient.

How to use safe mode on your Mac - Apple Support 

Safe mode disables loading third-party drivers, forces the OS to do disk repair, clear certain caches and logs and other miscellaneous housekeeping. It's non-destructive to user data so is safe to do. Very often certain weird software behavior is corrected by simply logging in this way as a troubleshooting method. When you're in safe boot, the machine will not be at its best performance, especially with graphics, but that's expected.

Does the problem persist while in Safe mode?

Exit safe mode by restarting your Mac normally and re-evaluate the issue again.

If the problem is still unresolved, please return here and post a reply and we’ll see what else we can come up with for help.

This problem is also happing to my computer. i have MAC Mini 2018, i tried all that was listed and also tried to in install the OS but still no luck please help.

i cannot drag a file from a Finder window to the Desktop. the "Do Not Enter" logo appears.

this happens in Normal Mode and in Safe Mode.

i went to Preferences, Desktop & Screen Saver, and i noticed that under Folders, the Desktop icon was greyed out. so i added the Desktop folder.

i did a right-click on the Desktop. the "Use Stacks" was not checked. i checked it. still no folders or files appearing.

I have the same issue and the May 31st answer does not solve the problem. Can someone from Apple please help?

I resolved my problem by bringing my MBA M1 to an Apple service center & had the OS re-installed.