I can't reproduce this at all.
The behavior I get is that in step 5 if you press Ctrl+V nothing happens
(no delay, no pasting) and if you right click the context menu entry for
"Paste" is greyed out (since X released ownership of the selection).
So, what version of Windows are you running and are you doing anything
with multiple languages or locales?
Microsoft Windows XP
Home Edition
Version 5.1 (Build 2600.xpsp2.030422-1633: Service Pack 1)
As for languages & locales, not aware that I'm doing anything strange. How
can I tell for sure? I have got the "Standards and Formats", under the
"regional options" tab of the "regional and language options" control
panel applet set to english(UK) forcurrency, date,... formatting, but
that's all that I know of.