Hrmm, maybe I read your post wrong. Did you first upload or download the file from or to Dropbox using the file transfer screen ("globe" button)? The link is established by uploading or download the file. 

It's explained in the manual at http://www.textasticapp.com/v4/manual/lessons/How_can_I_quickly_upload_downloaded_files.html

If you want to know how to move, copy or rename files: http://www.textasticapp.com/v4/manual/lessons/How_can_I_move__copy_and_rename_files_and_folders.html

Did you move the file after you downloaded it? If you move or rename a file, the link to the remote location is lost.

I've read it, but I'm quite happy how it works at the moment.

The right side of the edit area would be too small to allow cursor movement to the right. 

I did already fully implement a small cursor navigation control in the center of the screen above the keyboard that would recognize drag gestures, but I removed it after I found out that it didn't work well.

I'm not aware of an app that does that.

This is probably not that easy to implement, but it would certainly benefit a lot of users. I'll consider it for future updates.

Yes, another user had the same problem when running the Baidu input Jailbreak utility.

Thank you, Jonathan!