God I feel bad even posting this, there are like a million and one posts about drag & drop issues and links to solve them + videos. I used those same resources to set up my current drag and drop system and I almost have it save for two problems, which I will illustrate with pictures.
So here is my normal interface right:

This shows an open inventory panel and hotbar widget (not a panel). I want the user to be able to drag items from inventory to hotbar, and vice versa. That works fine, along with item swapping (swapping two items). Problem #1 comes when I try to drag from Hotbar to Inventory Window (not from Inventory Window to Hotbar):

This illustrates the dragged item is being drawn behind the panel for some reason. Problem #2 is if I drag an item out of the inventory entirely and just drop it there it will stay there where I dropped it. Where I would prefer to be able to handle that sort of situation and turn it into a physical dropped item the player can then re-pick up. Problem #2 is illustrated here:

So, that's about it. I am hoping this will be an easy one, because if I can figure this out then I am done with this part of it! As usual any and all help is appreciated!