I think that Interface's idrag.js build function (specifically, somewhere around line 490) should prevent highlighting. It's only really a problem in IE, where the fix is easy:

this.onselectstart = function() {return false;}

I've tested this on my local machine, and it works great in IE6. Doesn't throw an error or anything in Firefox, either.

Karl O'Keeffe supplied the equivalent for other browsers on Todd Ditchendorff's DnD selection entry (http://www.ditchnet.org/wp/2005/06/15/ajax-freakshow-drag-n-drop-events-2/). While I don't think it's necessary, you could also apply the following CSS to the draggable:

-moz-user-select: none;

-khtml-user-select: none;

user-select: none;