diff --git a/OpenSim/Region/Environment/Modules/World/Permissions/PermissionsModule.cs b/OpenSim/Region/Environment/Modules/World/Permissions/PermissionsModule.cs
index 5d48cbd919..b6b7d4a651 100644
--- a/OpenSim/Region/Environment/Modules/World/Permissions/PermissionsModule.cs
+++ b/OpenSim/Region/Environment/Modules/World/Permissions/PermissionsModule.cs
@@ -142,7 +142,6 @@ namespace OpenSim.Region.Environment.Modules.World.Permissions
                 return;
 
             m_allowGridGods = myConfig.GetBoolean("allow_grid_gods", false);
-
             m_bypassPermissions = !myConfig.GetBoolean("serverside_object_permissions", true);
             m_RegionOwnerIsGod = myConfig.GetBoolean("region_owner_is_god", true);
             m_ParcelOwnerIsGod = myConfig.GetBoolean("parcel_owner_is_god", true);
@@ -236,7 +235,7 @@ namespace OpenSim.Region.Environment.Modules.World.Permissions
         protected void DebugPermissionInformation(string permissionCalled)
         {
             if (m_debugPermissions)
-                m_log.Info("[PERMISSIONS]: " + permissionCalled + " was called from " + m_scene.RegionInfo.RegionName);
+                m_log.Debug("[PERMISSIONS]: " + permissionCalled + " was called from " + m_scene.RegionInfo.RegionName);
         }
 
         protected bool IsAdministrator(UUID user)
@@ -408,6 +407,14 @@ namespace OpenSim.Region.Environment.Modules.World.Permissions
             return objectFlagsMask;
         }
 
+        /// <summary>
+        /// General permissions checks for any operation involving an object.  These supplement more specific checks
+        /// implemented by callers.
+        /// </summary>
+        /// <param name="currentUser"></param>
+        /// <param name="objId"></param>
+        /// <param name="denyOnLocked"></param>
+        /// <returns></returns>
         protected bool GenericObjectPermission(UUID currentUser, UUID objId, bool denyOnLocked)
         {
             // Default: deny
@@ -425,7 +432,6 @@ namespace OpenSim.Region.Environment.Modules.World.Permissions
                 return false;
             }
 
-
             SceneObjectGroup group = (SceneObjectGroup)m_scene.Entities[objId];
 
             UUID objectOwner = group.OwnerID;
@@ -477,7 +483,6 @@ namespace OpenSim.Region.Environment.Modules.World.Permissions
             return permission;
         }
 
-
         #endregion
 
         #region Generic Permissions
@@ -655,8 +660,7 @@ namespace OpenSim.Region.Environment.Modules.World.Permissions
                 {
                     m_log.ErrorFormat("[PERMISSIONS]: Could not find user {0} for edit notecard check", user);
                     return false;
-                }                    
-            
+                }                                
 
                 if (userInfo.RootFolder == null)
                     return false;
@@ -1214,8 +1218,19 @@ namespace OpenSim.Region.Environment.Modules.World.Permissions
             return true;
         }
 
-        public bool CanCreateInventory(uint invType, UUID objectID, UUID userID)
+        /// <summary>
+        /// Check whether the specified user is allowed to directly create the given inventory type in a prim's
+        /// inventory (e.g. the New Script button in the 1.21 Linden Lab client).  This permission check does not 
+        /// apply to existing items that are being dragged in to that prim's inventory.
+        /// </summary>
+        /// <param name="invType"></param>
+        /// <param name="objectID"></param>
+        /// <param name="userID"></param>
+        /// <returns></returns>
+        public bool CanCreateInventory(int invType, UUID objectID, UUID userID)
         {
+            m_log.Debug("[PERMISSIONS]: CanCreateInventory called");
+            
             DebugPermissionInformation(MethodInfo.GetCurrentMethod().Name);
             if (m_bypassPermissions) return m_bypassPermissionsValue;
 
diff --git a/OpenSim/Region/Environment/Scenes/Scene.Inventory.cs b/OpenSim/Region/Environment/Scenes/Scene.Inventory.cs
index c6ad94c1de..0e28b0cb12 100644
--- a/OpenSim/Region/Environment/Scenes/Scene.Inventory.cs
+++ b/OpenSim/Region/Environment/Scenes/Scene.Inventory.cs
@@ -799,11 +799,9 @@ namespace OpenSim.Region.Environment.Scenes
                 if (agentTransactions != null)
                 {
                     agentTransactions.HandleItemCreationFromTransaction(
-                    remoteClient, transactionID, folderID, callbackID, description,
-                    name, invType, assetType, wearableType, nextOwnerMask);
+                        remoteClient, transactionID, folderID, callbackID, description,
+                        name, invType, assetType, wearableType, nextOwnerMask);
                 }
-
-
             }
         }
 
@@ -1002,7 +1000,6 @@ namespace OpenSim.Region.Environment.Scenes
         /// <param name="itemID"></param>
         public void MoveTaskInventoryItem(IClientAPI remoteClient, UUID folderId, SceneObjectPart part, UUID itemId)
         {
-
             InventoryItemBase agentItem = CreateAgentInventoryItemFromTask(remoteClient.AgentId, part, itemId);
 
             if (agentItem == null)
@@ -1316,17 +1313,17 @@ namespace OpenSim.Region.Environment.Scenes
         }
 
         /// <summary>
-        /// Rez a script into a prim's inventory
+        /// Rez a script into a prim's inventory, either ex nihilo or from an existing avatar inventory
         /// </summary>
         /// <param name="remoteClient"></param>
         /// <param name="itemID"> </param>
         /// <param name="localID"></param>
         public void RezScript(IClientAPI remoteClient, InventoryItemBase itemBase, UUID transactionID, uint localID)
         {
-            UUID itemID=itemBase.ID;
+            UUID itemID = itemBase.ID;
             UUID copyID = UUID.Random();
 
-            if (itemID != UUID.Zero)
+            if (itemID != UUID.Zero)  // transferred from an avatar inventory to the prim's pinventory
             {
                 CachedUserInfo userInfo = CommsManager.UserProfileCacheService.GetUserDetails(remoteClient.AgentId);
 
@@ -1378,9 +1375,9 @@ namespace OpenSim.Region.Environment.Scenes
                     }
                 }
             }
-            else  // If the itemID is zero then the script has been rezzed directly in an object's inventory
-            {
-                SceneObjectPart part=GetSceneObjectPart(itemBase.Folder);
+            else  // script has been rezzed directly into a prim's inventory
+            {                
+                SceneObjectPart part = GetSceneObjectPart(itemBase.Folder);
                 if (part == null)
                     return;
 
@@ -1389,11 +1386,14 @@ namespace OpenSim.Region.Environment.Scenes
 
                 if ((part.OwnerMask & (uint)PermissionMask.Modify) == 0)
                     return;
+                
+                if (!ExternalChecks.ExternalChecksCanCreateInventory(itemBase.InvType, part.UUID, remoteClient.AgentId))               
+                    return;             
 
                 AssetBase asset = CreateAsset(itemBase.Name, itemBase.Description, (sbyte)itemBase.AssetType, Encoding.ASCII.GetBytes("default\n{\n    state_entry()\n    {\n        llSay(0, \"Script running\");\n    }\n}"));
                 AssetCache.AddAsset(asset);
 
-                TaskInventoryItem taskItem=new TaskInventoryItem();
+                TaskInventoryItem taskItem = new TaskInventoryItem();
 
                 taskItem.ResetIDs(itemBase.Folder);
                 taskItem.ParentID = itemBase.Folder;
diff --git a/OpenSim/Region/Environment/Scenes/SceneExternalChecks.cs b/OpenSim/Region/Environment/Scenes/SceneExternalChecks.cs
index f8d041a1f0..c5bbcddf33 100644
--- a/OpenSim/Region/Environment/Scenes/SceneExternalChecks.cs
+++ b/OpenSim/Region/Environment/Scenes/SceneExternalChecks.cs
@@ -1070,7 +1070,7 @@ namespace OpenSim.Region.Environment.Scenes
 
         #endregion
 
-        public delegate bool CanCreateInventory(uint invType, UUID objectID, UUID userID);
+        public delegate bool CanCreateInventory(int invType, UUID objectID, UUID userID);
         private List<CanCreateInventory> CanCreateInventoryCheckFunctions = new List<CanCreateInventory>();
 
         public void addCheckCanCreateInventory(CanCreateInventory delegateFunc)
@@ -1085,7 +1085,7 @@ namespace OpenSim.Region.Environment.Scenes
                 CanCreateInventoryCheckFunctions.Remove(delegateFunc);
         }
 
-        public bool ExternalChecksCanCreateInventory(uint invType, UUID objectID, UUID userID)
+        public bool ExternalChecksCanCreateInventory(int invType, UUID objectID, UUID userID)
         {
             foreach (CanCreateInventory check in CanCreateInventoryCheckFunctions)
             {
diff --git a/bin/OpenSim.ini.example b/bin/OpenSim.ini.example
index 7c5c995212..a529a489a4 100644
--- a/bin/OpenSim.ini.example
+++ b/bin/OpenSim.ini.example
@@ -111,6 +111,7 @@
     ;permissionmodules = "DefaultPermissionsModule"
     serverside_object_permissions = false
     allow_grid_gods = false
+
     ; This allows somne control over permissions
     ; please note that this still doesn't duplicate SL, and is not intended to
     ;region_owner_is_god = true
@@ -212,6 +213,7 @@
     ; user_send_key and user_recv_key, too
     messaging_server_url = "http://127.0.0.1:8006"
 
+
 [ClientStack.LindenUDP]
     ; This is the multiplier applied to all client throttles for outgoing UDP network data
     ; If it is set to 1, then we obey the throttle settings as given to us by the client.  If it is set to 3, for example, then we 
@@ -432,6 +434,7 @@
   dump-line-size=32
   flush-on-error=true
 
+
 ; Uncomment the following for IRC bridge
 ; experimental, so if it breaks... keep both parts... yada yada
 ; also, not good error detection when it fails