If you simply select a cell, Microsoft Project will drag and drop (or cut / paste) the cell's contents only.  By selecting using the row heading the entire task is selected (including any assignments / progress / links against the task).
	The easiest way to change a task into a milestone is to make its duration 0.  Milestones can be at any position within the project's outline, although they should ideally be within the topmost levels.
	If undo is available, that would restore a previous command.  It is more likely that you would select the task (or tasks) and then use outdent to promote the task(s) to a higher level within the project's outline.