Ok, So how do we pick up objects and move them around without placing them in our inventory? I know this is possible because in the making of Skyrim videos you can clearly see the player pick up a book.

hold the A button instead of tapping it.

Ok I'll try this
thanks in advance

Ok, so do you mean that you have to hold the A button the entire time you want to move the object? or just hold it for a second or two then again when you want to drop it?

Holding it initiates it. You press it again to let go. I found it's more fluent to map it to RB, and have A as your power. That way you can quickly move the right stick instead of adjusting your fingers. (:

Yeah I might even go as far as to change it to my anologue stick because that's what I'm used to. I can put my shouts at A and POV changer to RB