UPDATE: 25th April 2011 - The problem seems to have been resolved by a recent software update.
Since I upgraded to Firefox 4 I have been unable to select from the search box drop-down list
When you attempt a search from the search box on your Google Toolbar it may not allow you to select items from your drop-down list of web history or search suggestions.
As a workaround, try using your keyboard up and down arrows to navigate the drop-down list to select your search history, press return to select.
See previous post link