I think that Wyldkat makes an excellent point about having no expectations for participation. My DD went to story time for at least 6 months before she would do the most minor of participation (think clapping with one song, sometimes just ONE clap). She would sit glued to my lap. People looked at me funny, but I ignored them and we went week after week. It looked like nothing was happening, but there was...she just needed to get comfortable with it. And then bit by painfully small bit she started participating. This also happened in gymnastics where she would do the running around type activities, but didn't do the circle time stretches for over a year(!). Even now she'll have an off day and not want to participate, but the teacher is fine with that and encourages but doesn't insist. Our playgroups were a similar story with her often glued to my lap while the other kids played.
From my experience, the more you insist they participate, the more ground you lose. Encourage, but don't push too hard. They will do it when they are ready and not before.
