Disable collision on the object you’re dragging and enable it only once dragging is finalised. Otherwise, the line trace will hit the object (here, a chair) that you are dragging. We want to trace against the floor only, for example. Unless you wish to stack a chair on top of another chair, ofc.
Alternatively, look into how custom collision channels work - here the trace can be set up in such a way that certain groups of objects can be easily ignored. This is by far the most efficient method and gives you a lot of control over how tracing behaves.
Perhaps you want to place lamp sconces in areas that make sense only - walls, rather than floors. Collision channels would allow you to ignore certain surfaces:
Placing a wallpaper on a wall blocked by a wardrobe would be possible because dragging wallpapers uses a channel that furniture ignores.
Once I do an action (like jumping or toggling between first and thrid person) I can’t drag the widget anymore
Sounds like the widget has lost focus. Are we in Game and UI Input Mode? Make sure the root of the widget has the isFocusable flag enabled.