Victor,
I'd like to add to my last post ... While the answer I gave you will work just fine, it's not the best way to do it. I've discovered something better. Every control has a PointToClient() method. Use it like this:
Dim xy As Point = pnlDrop.PointToClient(New Point(e.X, e.Y))
Isn't that a little cleaner? =)
~~Bonnie