Should probably be:

   GdkDragAction actions;
 
  if (!drop_x11->xdnd_have_actions)
    actions = drop_x11->suggested_action;
  else if (drop_x11->suggested_action & GDK_ACTION_ASK)
    actions = drop_x11->xdnd_actions | GDK_ACTION_ASK;
  else
    actions = drop_x11->xdnd_actions & GDK_ACTION_ALL;

I think it also needs to look like this (not a diff, because I reindented and the diff screwed everything up):

static void
gdk_x11_drop_status (GdkDrop       *drop,
                     GdkDragAction  actions,
                     GdkDragAction  preferred)
{
  GdkX11Drop *drop_x11 = GDK_X11_DROP (drop);
  GdkDragAction possible_actions, suggested_action;
  XEvent xev;
  GdkDisplay *display;

  display = gdk_drop_get_display (drop);

  possible_actions = actions & gdk_drop_get_actions (drop);

  if (preferred & possible_actions)
    suggested_action = preferred;
  else if (drop_x11->suggestes_action & possible_actions)
    suggested_action = self->suggested_action;
  else if (possible_actions & GDK_ACTION_COPY)
    suggested_action = GDK_ACTION_COPY;
  else if (possible_actions & GDK_ACTION_MOVE)
    suggested_action = GDK_ACTION_MOVE;
  else if (possible_actions & GDK_ACTION_ASK)
    suggested_action = GDK_ACTION_ASK;
  else
    suggested_action = 0;

  xev.xclient.type = ClientMessage;
  xev.xclient.message_type = gdk_x11_get_xatom_by_name_for_display (display, "XdndStatus");
  xev.xclient.format = 32;
  xev.xclient.window = drop_x11->source_window;

  xev.xclient.data.l[0] = GDK_SURFACE_XID (gdk_drop_get_surface (drop));
  xev.xclient.data.l[1] = (possible_actions != 0) ? (2 | 1) : 0;
  xev.xclient.data.l[2] = 0;
  xev.xclient.data.l[3] = 0;
  xev.xclient.data.l[4] = xdnd_action_to_atom (display, suggested_action);