What browser do you use?
What are treeview settings? Could you please provide me FlyTreeView tags at your ASPX page?
I've just tested similar case with on demand population (filesystem) + drag and drop. Got no errors here:
BorderColor=\"Silver\" BorderWidth=\"1px\" Height=\"320px\" Width=\"280px\" Padding=\"3px\"
OnPopulateNodes=\"flyTreeView_PopulateNodes\" Style=\"display: block\"
DragDropName=\"1\" DragDropAcceptNames=\"1\">
Padding=\"1px;3px;3px;1px\" RowHeight=\"16px\" />
BorderWidth=\"1px\" ForeColor=\"White\" Padding=\"0px;2px;2px;0px\" ImageUrl=\"$classic_folder_open\" />