Some feedback...  I get the same ghost hourglass while dragging images added with both setHTML  AND setBgImage on my 200 meg machine.
 
I have started using setBgImage because ns6 doesn't drag an image added with setHTML, unless I put an empty layer handle on it. 
 
I've fixed this issue in NS6. I've posted patches to sourceforge but so far they've been ignored...
 
You can apply them yourself though if you want. Just do to patches from the dynapi project page at sourceforge. you'll need the patch utility to apply them. The events patch fixes the above problem, you may want the dynlayer one as well.
 
cheers,
 
cameron.

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