I've redesigned parts of Drag'n'Drop during the last week. Now it's good enough so that I'll start implementing OLE Drag'n'Drop. I've also rewritten the mouse-event detection, so some events behave different now. This step was necessary for Drag'n'Drop.
Here's how Drag'n'Drop is working now:
How to start dragging?
There's an event (ItemBeginDrag) that will notify you if the user starts dragging an item. In response to this event you'll call a method called BeginDrag, which takes a container object with the items to drag and a handle to the imagelist that contains the drag-image. The drag-image still shouldn't be used for Non-OLE Drag'n'Drop, because of the drawing bugs.
Dragging...
Once you called BeginDrag, the DragMouseMove event will get fired on mouse moves. Highlighting the potential drop-target and setting the insertion mark must be done explicitly now. The event proposes a drop-target. If you don't like it, change it.
Auto-expanding and -scrolling gets done via the event: You set a flag whether to auto-expand the potential drop-target. In detail, auto-expansion works as follows: The control has a property DragExpandTime, which defines the number of milliseconds that the control will wait before auto-expanding an item. The code, that fires the DragMouseMove event, checks whether the drop-target is another one than the last time the event was fired. If it changed, the auto-expansion timer is started. If the drop-target changes or if you set the mentioned flag to False before the timer expires, auto-expansion is canceled for this item. Otherwise it gets expanded.
Auto-scrolling works similiar: There's a property DragScrollTimeBase. The DragMouseMove event asks you for the relative scrolling speed and direction for horizontal scrolling as well as for vertical scrolling. The real scrolling speed is calculated using the DragScrollTimeBase and the value that was returned from the event. So if you want it, you can highly customize the scroll-sensitive zone (the default is a 16 pixel wide belt around the client area) and even change scrolling speed depending on the mouse cursor's position.
Aborting or dropping
Pressing Esc or releasing the mouse button must still be handled by *your* code. If you want to stop Drag'n'Drop, you just call EndDrag. It takes a Boolean parameter that indicates whether to abort the whole thing. Depending on this parameter, either the AbortedDrag or Drop event gets fired. What you do in response to these events is up to you.
What's next? I'll improve the item-moving feature (I mean the TreeViewItem.Move() method) to make it easier to use. Creating drag-images that contain multiple items needs to be done, too. Well, and of course OLE Drag'n'Drop.
But development will slow down until March 1st, because I have to learn for a very difficult and very important test.
)
and I already gave ExplorerTreeView 2.0 the codename "Duke Nukem" :buck:, but I better release late than never. 
Okay, you have to invoke sorting yourself, but I can't think of a scenario in which automatic sorting would be faster.
No, seriously, OLE Drag'n'Drop is still far away.