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This is likely to happen if you're running on an ATI Graphics Card. Thanks to them dropping OpenGL support in their latest drivers (anything above 7.11), you can't select anything in Hammer's 3D window.
Solution? Download this file and place the atioglxx.dll file that is inside the zipfile in your Hammer root directory (IE: C:Program FilesValve Hammer Editor). This might not work on all graphics cards. If it didn't work, try doing the same thing but with this opengl32.dll file instead.
You are now able to select objects in the 3D window using the latest ATI driver on Windows XP.
NOTE: This solution has not been tested on Windows Vista and 7.