If you have an older MacBook Pro or MacBook Air (with multitouch), with OS 10.6.4 and the Multi-Touch Trackpad Update 1.0, but can still only get inertial scrolling, and you want the 3 finger drags, this method shows you how. It involves editing system files, so proceed with caution.

Open a new Finder window and navigate to /System/Library/Extensions. Make two backup copies of AppleUSBMultitouch.kext (one as a safety net, and one to edit), and then perform the modifications below to the editing copy.

First, enter the .kext file (using Show Package Contents), then go to Contents, then open Info.plist (I usually open it in Property List Editor that comes with Xcode Tools (which come on the OS X Install discs, but other text editors should work too). If it opens in Property List Editor, then do the following:

• Go to IOKitPersonalities and open it
• On all the sections begining with WSTrackpad*3 (like WSTrackpadISO3) scroll down until you get 'TrackpadThreeFingerDrag.' Copy that line (it should have a tick next to it).
• Paste it in all the sections begining with WSTrackpad that don't already have it.
• Save the changes.

To install the modified copy, delete the original (You should have also made a safety net backup of the original version, if you haven't do so now), and then drag the new, edited, version in its place. It might ask for your password. Then open Disk Utility (located in the Utilities folder in the Applications folder), and click 'Repair Disk Permissions' on the boot disk (this is important, as otherwise, you won't have keyboard or trackpad usability at all). Reboot, then open System Preferences. Click on Trackpad. Under 3 finger gestures, you should be able to select on either swipe or drag (the video for drag doesn't work).

Note: You MUST repair permissions before the reboot, otherwise you'll lose keyboard and trackpad functionality completely. If this happens anyway, you can try booting from another disk and copying the safety net backup to the original location, then repair permissions, and reboot again.

This only works on MacBookPro4,1 or later and MacBookAir1,1 or later. Older models will keep the same nonmultitouch trackpad preference pane. I have only tested this on a MacBookPro4,1. Newer models might not have a difference in the preference pane. Credit for this hint goes to this Macrumors forum thread. There are some pictures in that thread of how the edited version should look.

[crarko adds: I haven't tested this one. Be absolutely certain to make the backups, understand the copy procedures, and get the permissions repair done, or you'll likely be doing a system reinstall. It would be wise to have a current Time Machine backup and the correct OS X Install discs handy too, just in case. I don't have one of the mentioned machines to try this out on; if any of you do try this please tell us all how it went.]