I keep experiencing this bug, especially after the first few levels are completed. When I buy up the last few pieces of available land there's usually at least one plot (or large chunk of a plot) which behaves as if it is already occupied. I can't even place a single bench or fire extinguisher in the middle of an empty floor plan; the annoying doctor pops up and tells me I can't place an item there because it will block the path. When the item is hovering where I want to place it it has the white border which indicates that it's a valid place to put the item and the item itself is coloured (it's grey/black & white when it can't be placed) but I'm still unable to add it.

Does anyone know why this happens and how to work around it?

Cheers!

Update #1: I've tried editing the memory limits of DOSBox, thinking that maybe 16MB wasn't enough to accommodate the vastness of later hospitals, but it didn't help.

I also realised that the doctor helper guy doesn't pop up all the time, in fact most of the time he doesn't. I click to place an item and it just doesn't appear.

I've noticed, too, that if I find that I can no longer add items, I can Alt-tab out of the game and back in again and then I'm able to place one item at a time for a brief period (attempting to buy 2 or more at once doesn't help), then the bug begins again. This doesn't work consistently, though.

Like above, I can place one item at a time for a brief period if I move away from the area in question and do a few other things for a while and then return.

Any ideas? :)

I'm not sure why this is marked as "solved" (or if I accidentally did it myself haha) but it's not solved. I haven't been able to play the game properly since I posted this thread. If anyone can help I'd appreciate it :)

I'm having this same problem in the third hospital, after a while into the game I can't place any new items or new rooms, the adviser keeps popping up and saying "that item block access to a door" or "that room blocks access to another room.

It seems that restarting the level the bug happens on will fix it, it's worked for me so far, try it and let me know.

Unfortunately, the game is a little buggy sometimes and there is no other solution than to restart the level. I think I've had to restart 10 times so far because of bugs, people getting stuck, duplicate images etc.

I had the same problem, and read here that the only solution was to restart the level. Thankfully I'm a regular saver (and thank you autosave) and that has helped me recover from some bugs in the game (like from what can happen when you pick up a surgeon from the operating room)
Anyways. I do not have a solution but I think I might possibly have an explanation, although I'm far from 100% certain.
The bug also started for me soon after I bought a new section. I loaded a previous saved game and everything was as it should be. I then bought a different section and soon after that it started again.
What these two game plays had in common was that I blocked the entrance with chairs (so the handymen wouldn't go there, get cold and demand a higher salary). Then I built a room and forgot to remove the chairs. When I played for the third time I removed the chairs before I built the desired room and everything ran smoothly towards sweet sweet victory.
My guess is that if a room is inaccessible, and a patient gets sent there, the bug starts. Please let me know (and for others) if I'm being a silly goose or if this could make sense.

For me it started in a first hospital after placing 3 rooms was not able to place any other room. Doctor would show up and say that this room would block another one.