We consider short-time existence, uniqueness, and regularity for a moving boundary problem describing Stokes flow of a free liquid drop driven by surface tension. The surface tension coefficient is assumed to be a nonincreasing function of the surfactant concentration, and the surfactant is insoluble and moves by convection along the boundary. The problem is reformulated as a fully nonlinear, nonlocal Cauchy problem for a vector-valued function on a fixed reference manifold. This problem is, in general, degenerate parabolic. Existence and uniqueness results are obtained via energy estimates in Sobolev spaces of sufficiently high order. In the two-dimensional case, the problem is strictly parabolic, and we prove instantaneous smoothing of the free boundary, using maximal regularity results in little Hölder spaces.