Multiple players I was gaming with this evening and random survivors we met had the same issue/bug.
Rags can not be used directly off your hotbar. You can select them by pressing the assigned hotbar number so they're in your hand, but you have no option to Use them. Only right-clicking on them in your inventory works.
Bandages seem to work fine.
Hi,
sadly, we were not able to reproduce the issue - it might have expired or it might be a bit more complicated than suggested here.
If the issue persists after the next Steam update, please submit a new ticket and try to provide as much information as possible (e.g. state of the rags, count, location, actions performed beforehand etc.)
Thank you,
Andy