I finally patched scriptaculous 1.8.1. You can download all of the script with my changes in dragdrop.js from http://tankut.googlepages.com/home.
Also please note that, there was a bug in IE with absolutely positioned elements. The bug is fixed (see my ticket) and but applied after 1.8.1. It will be in the next release of scriptaculous but I applied the fix in my patch.
So anyone using this patch anymore? Please leave some comments also if anyone can test this on IE6 that will be nice.