You can simply use the example at http://www.asp.net/AJAX/AjaxControlToolkit/Samples/DragPanel/DragPanel.aspx
to see this bug.
In FireFox 3.0.7, dragging the panel past the edge causes scrolling the is jumpy = not smooth. I am not sure what was intended?
If you drop the panel, the drop is canceled (the panel reverts bask to its original position).
The behaviour looks very unprofessional. Either the browser should not scroll at all, or the scrolling should be smooth and the drop should work.
These problems make the DragPanelExtender unusable for simple dragging and dropping (not using a drop target).