The Collaborative International Dictionary of English v.0.48:

Dally \Dal"ly\, v. t.
   To delay unnecessarily; to while away.
   [1913 Webster]

         Dallying off the time with often skirmishes. --Knolles.
   [1913 Webster]

The Collaborative International Dictionary of English v.0.48:

Dally \Dal"ly\ (d[a^]l"l[y^]), v. i. [imp. & p. p. Dallied
   (d[a^]l"l[i^]d); p. pr. & vb. n. Dallying.] [OE. dalien,
   dailien; cf. Icel. pylja to talk, G. dallen, dalen, dahlen,
   to trifle, talk nonsense, OSw. tule a droll or funny man; or
   AS. dol foolish, E. dull.]
   1. To waste time in effeminate or voluptuous pleasures, or in
      idleness; to fool away time; to delay unnecessarily; to
      tarry; to trifle.
      [1913 Webster]

            We have trifled too long already; it is madness to
            dally any longer.                     --Calamy.
      [1913 Webster]

            We have put off God, and dallied with his grace.
                                                  --Barrow.
      [1913 Webster]

   2. To interchange caresses, especially with one of the
      opposite sex; to use fondling; to wanton; to sport.
      [1913 Webster]

            Not dallying with a brace of courtesans. --Shak.
      [1913 Webster]

            Our aerie . . . dallies with the wind. --Shak.
      [1913 Webster]

WordNet (r) 3.0 (2006):

dally
    v 1: behave carelessly or indifferently; "Play about with a
         young girl's affection" [syn: dally, toy, play,
         flirt]
    2: waste time; "Get busy--don't dally!" [syn: dally, dawdle]
    3: talk or behave amorously, without serious intentions; "The
       guys always try to chat up the new secretaries"; "My husband
       never flirts with other women" [syn: chat up, flirt,
       dally, butterfly, coquet, coquette, romance,
       philander, mash]
    4: consider not very seriously; "He is trifling with her"; "She
       plays with the thought of moving to Tasmania" [syn: dally,
       trifle, play]