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Go to Apple --> System Preferences --> Accessibility. Choose "Mouse & Trackpad" from the left column, and click on the "Trackpad Options..." button in the right window. Make sure that the box called "Scrolling" is checked. In my case this was not checked and I couldn't use two-finger scrolling in any window or application.


I fixed this by editing the AppleShowScrollBars string in the ByHost .GlobalPreferences plist. Even though ~/Library/Preferences/.GlobalPreferences.plist showed the correct value of ‘WhenScrolling’, the ~/Library/Preferences/ByHost/.GlobalPreferences.udid.plist had the value of "Always". By changing the string using Xcode and logging out, it was resolved.

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