CommonControls (Replacement of the MS common controls)

[Krool]

Yes - without SnapToGrid it doesn't push items in forward, but no worky either, as items are not ordered.

Dragged item stays where it is dropped, without added empty space to position item between items, likewise no removed empty space where the item was positioned before drag operation.

I think for your purpose you need some kind of manual mode d&d. Like it is used in the Demo on the TreeView.
Start dragging and drop per InsertMark.