I have downloaded source code from: http://www.divil.co.uk/net/articles/designers/hosting.asp and its very complex. It allows one to create, manipulate, move etc controls in run time.
The only problem is, I need to be able to programmatically place a PANEL on top of all the controls and other stuff and still use the control box to drag controls on top of this panel. At the moment I can achieve this but the controls dissapear behind the panel!
Please download the code and try it out for yourself!

Manipulating controls in design time