I can drag drop onto the kendo ui diagram tool and the drop functions as it should (based on your kendo ui demo) which I have downloaded.
(I cant see a similar MVC version which is a shame)
However, I just cannot get the drop function to work on the MVC version of the diagram control. I can start the drag and see that working but the drop never fires. I can drop onto other elements on the same layout. I'm using the kendoDropTarget as per your demo. If I create a layout with both the MVC diagram and the kendo version (different id's) the kendo ones works the MVC one does not.
I'm using the latest R2 2017 with Chrome browser, MVC 5
Any ideas please?