I used some example code from Microsoft to draw a rubber band rectangle when I drag my mouse:
I modified that code so that when the rectangle is dragged over a small PictureBox in my form, the PictureBox is moved out of the way. When that happens, the rubber band rectangle leaves marks on my screen! The bigger my form is, the worse the problem is; so this problem might not be reproducible with a really good graphics card.
Here's my project written in Microsoft Visual Studio 2008 then zipped up if anybody would like to try it: