Apparently ArcMap's georeferencing tools become grayed out when the data frame is rotated (controlled in the Data Frame Tools toolbar), though nothing will tell you that is the problem as you poke around aimlessly and waste a half hour. The answer ("The data frame is rotated. ArcMap cannot apply a double-transformation to the raster") is here but I am adding this note here to try to make the solution more easily Google-able in the future when this stupid annoyance inevitably bites me again and I can't georeference something.
Posted by Charles on November 4, 2008 04:53 PM