I believe this problem to be related to the well-known "position: relative" and overflow bug in IE6 and 7 as described in: http://snook.ca/archives/html_and_css/position_relative_overflow_ie/
. The docking zone has position: relative, and if it is placed in a parent element that can be scrolled, it will appear as going outside the parent's boundaries in IE6 or 7. Setting position: relative to the parent resolves the issue. So please set position: relative, to the parent element and see if the problem is resolved.
If this does not help in resolving the issue, could you please send us a sample runnable project that shows the problem, so we can debug it locally? You could also provide a live URL where the issue can be observed.
the Telerik team