Ok, here's the code that does the trick I was seeking for. Vlad suggested a timer, mdown(), mrow() and mcol(). And Ed suggested hWnd. The good thing about hWnd is that it gives the form reference on the caption and the borders also! Thanks to both of you and to Caroline. :)

*method TIMER
local loUnderPointer
with thisform
   do case
   case mdown()
      *	
      if not .lMouseOnForm    && userdefined property
         *
         if mrow() < 0 or mcol() < 0
            *
            loUnderPointer = sys( 1270 )
            *
            .lMouseOnForm = type( 'loUnderPointer' ) = 'O' and loUnderPointer.hWnd = .hWnd
            *
            if not .lMouseOnForm
               .release
            endif
         endif
      endif

   case .lMouseOnForm
      *
      .lMouseOnForm = .f.
   endcase
endwith

>>Peter,
>>
>>Just off the top of my head could you determine if the MouseDown is outside the form by using the Form Top, Left, Height, Width and the current mouse position in the screen. If you can then you could alter the forms Top, Left, Height, Width to give an invisible margin around the form.
>>
>
>The obvious way to do this is to save the hWnd of the Form, and use a timer to detect if the current foreground window has the same hWnd as the form to hide; you can use the template code for detecting when VFP is no longer in foreground that I posted in the FAQ.