I recently noted that I had accidentally dragged a file in to the Favorites folder.
No problem. I’ll just drag it off.
Except that dragging an item off the Favorites sidebar doesn’t work any more in Lion. Thanks Apple!
Thanks to a bit of googling and other users with the same problem, I found the trick.
Hold down the “Command” button while dragging the file.
The file comes off with and vanishes with the regular puff of smoke when you let go of it outside of the Finder window.