"Pertior, the mountain dwarven shopkeeper shakes his head and forbids dropping the rags."

So, Pertior doesn't want to buy my rags. After I receive a head-shake, my "drop item" dialog returns to let me choose a different item to sell. That's JADE behaving as expected.

However, if I persistently try to drop unwanted stuff, the top of the screen eventually gets filled with "...shakes his head and forbids dropping..." messages, and a "(more)" appears. After that, the dialog disappears and doesn't come back.

It's not a game-breaker, but that's probably not intended behaviour.