Hi,

After we build a DragPanel behavior to your panel, we need build a div with a specific size as a canvas. And DragPanel will not be outside of it.

I didn't encounter the "position:absolute" issue about DragDrop or RoundConer so far.(see this: http://www.codeplex.com/AjaxControlToolkit/WorkItem/List.aspx)

I saw your sample, it's very beautiful. But creating 20 table cells is too complicated. Besides using RoundConerExtender, to build a round-coner div by ourselves, you can check this link: http://methvin.com/jquery/jq-corner-demo.html. This is made by JQuery and it provides a very simple method to build it.  Hope it can help you.