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After some experiments, I never tried dragging objects because there are such extreme differences between NN4 and IE5, and this means writing separate (and elaborate) codes. It's good to know that NN6 and IE5 line up for you ... there's hope for the future.
Usually in NN4 you use document.layers to address the dragged object, but document.layers is no longer supported in NN6. My guess would be that your problems lie in this area, and writing just one code for all browsers is not achieveable.