Bump. I have this problem too. Any solutions? Presumably would be through an addon. Also I often get it where the tab maving arrow 'sticks' on the end of the far right tab in the browser, when I'm not moving tabs any more, although simply moving a tab to another location and back again (and hence moving the tab moving arrow) causes this to disappear... until it randomly happens again.

I'm using Firefox 4 on Windows 7.

I am using version 9.0.1 and it is still happening. How can I move the little blue arrow so it is on top of the Tab Bar indicating where the tab will be dragged or moved to?

You first need to set focus to the Tab bar if you want to use the cursor keys to move a tab.
You can do that by setting the focus to the location bar (Ctrl+L) or the search bar (Ctrl+K) and then press the Tab key until you see a focus ring on the currently selected tab.

See:

• https://support.mozilla.org/kb/Keyboard+shortcuts#w_windows-tabs

cor-el, I believe you misunderstand me. I'm not talking about moving the tabs with the cursor keys. The arrow I'm talking about is the one indicated in the picture I've attached to this reply. Before Firefox 4, that arrow was above the tabs, but after that it has been moved so that it now is below the tabs (it's still in the same place now in Firefox 9.0.1). This is a problem, as it sometimes becomes difficult to see the arrow depending on the colour of the website you're using.