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- If you want just drag and drop use jQuery UI.

- If you want to connect divs use jsPlumb.

- If you want flowcharts use jsPlumb + jQuery UI. jQuery to drag elements on to the diagram div and jsPlumb to connect them.

You can achieve almost every thing what ever is being done here. I have used it personally to create something very similar. jsPlumb is MIT License, so you don't have worry about any thing.

http://cappuccino.org/ - Javascript and objective-j. It's not a library, but a framework.

My company makes goxam.com which is a powerful WPF/Silverlight diagramming library.

We are also in private alpha for GoJS (gojs.net), which is the same library ported to HTML5 Canvas.

If you are interested in seeing GoJS once it is released as a more public alpha or beta please email me (see profile)

The people who created diagramly used their library which they sell.

http://www.jgraph.com/mxgraph.html