draggable_element Messing up CSS for IE7

I am having trouble with draggable_element and come IE7 css. I have a
list where I want the items in the list to be draggable. I need the
list to have a fixed height so I would like a scrollbar. I use
overflow:auto and everything works great in Firefox and Safari. But
IE doesn't respect the overflow:hidden. Well, it kind of does. It
creates the scroll bars but lets everything spill out past it.

After some testing I tracked it down to calling draggable_element on
the list items. If I remove that then everything displays

You can see an example here:


Any help would be greatly appreciated.