I am sorry for the delayed reply.
I tried running the example from this thread with the 7.20 and 2.24 builds and the items did not disappear on drop. Quite possibly I am missing something?
For the Service pack the DragDrop should have improved even more, adding a DropPosition property to the TreeView item and making several methods public for better customization. But of course it would be no good if it is not working as before. Can you please give more details about the scenario you are using it in?
the Telerik team