Transform handles are moving the object and not scaling.

I've been running into trouble with the transform handles on objects moving the object instead of scaling/stretching the object. It seems to happen on the bottom and right sides vs the top and left sides. When I have the mouse over the handle it shows the scaling icon, but when I press the mouse it turns into the black selection arrow. Is anyone else experiencing this and know how to fix it?

kjredin,
I am afraid you have come across the Live Rectangle bug which is limited to the MAC versions starting with 10.7 and 10.8, but not 10.9 (Mavericks) or 10.10 (Yosemite). Hopefully, the bug will be fixed soon.
So a switch to Mavericks or Yosemite with a reinstallation might be the way to solve it here and now.
To get round it in each case, it is possible to Expand the Live Rectangles to get normal old fashioned rectangles, or to Pathfinder>Unite, or to use the Scale Tool or the Free Transform Tool.
A more permanent way round that is to create normal old fashioned rectangles, after running the free script created by Pawel, see this thread with download link:
https://forums.adobe.com/thread/1587587

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