It sounds like you're missing one leg. The motor and timer use 120 and the heater uses 240. So if you have one leg and neutral, it will behave as you describe. Take your voltmeter and check the voltages. Each hot to neutral should be 120 volts, hot to hot should be 240.
The old wiring tied neutral and ground together in the dryer. There is probably a jumper at the terminal block where you connect the dryer cord to tie neutral and ground together; this jumper is removed when you use a four-wire receptacle.
Obviously the four-wire setup is safer than three-wire; if it wasn't the code wouldn't have been changed. Nonetheless, there are millions of dryers using the old setup with no problems. On the other hand, two dryers on the same 30 amp circuit is a definite no-no.
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