You need to change your tabs settings see

• Tab preferences and settings
• Use tabs to organize lots of websites in a single window

You may also be aware that a new version of firefox, firefox 4 is going to be released shortly that has some changes to how tabs may be handled see

• How to make the new Firefox look like the old Firefox
• Use Tab Groups to organize a lot of tabs
• Pinned Tabs - keep favorite websites open and just a click away

The setting were correct. It turned out that I had to delete the bing search engine add on and it solved the problem. Don't ask me what one has to do with the other but it worked.

I do not use the bing search engine, but have seen a few posts about it. At least at one time recently there appears to have been a plugin and the only option may have been to allow bing to be the search engine, or have a bing toolbar; for all browsers or none of them.

Glad you solved the problem.
I must admit I was not aware the Bing toolbar affected the ability to open tabs in firefox.

One article about the Bing toolbar is:

• Removing the Search Helper Extension and Bing Bar