The code movieclip is what does most of the work. It is used to set your variables, arrays, and build your elements to the screen. We'll break it down by function. The first function is what I use to initialize my variables and arrays.
function inits() {
//setting global variables
_root.howmany = 4; specify how many drag and drop items you want
_root.targetX = 90; sets the starting X position for your targets
_root.targetY = 90; sets the starting Y position for your targets
_root.objectX =450; sets the starting X position for your drag objects
_root.objectY = 90; sets the starting Y position for your drag objects
_root.spacing = 50; set the spacing between both targets and objects
//setting arrays
cover = new Array(); array used to tell if your targets are covered or not
target_array = new Array(); array used to hold the X & Y positions of your targets
object_array = new Array(); array used to hold the X & Y positions of your objects
}