Index: lams_central/web/lams_authoring.swf
===================================================================
diff -u -rcea845b43eaed95e5e8109a216be04c462f190a4 -r0379c3c050496e1bd6fc6406ae13221ff11bc937
Binary files differ
Index: lams_central/web/lams_authoring_library.swf
===================================================================
diff -u -rcea845b43eaed95e5e8109a216be04c462f190a4 -r0379c3c050496e1bd6fc6406ae13221ff11bc937
Binary files differ
Index: lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasController.as
===================================================================
diff -u -rcea845b43eaed95e5e8109a216be04c462f190a4 -r0379c3c050496e1bd6fc6406ae13221ff11bc937
--- lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasController.as	(.../CanvasController.as)	(revision cea845b43eaed95e5e8109a216be04c462f190a4)
+++ lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasController.as	(.../CanvasController.as)	(revision 0379c3c050496e1bd6fc6406ae13221ff11bc937)
@@ -144,7 +144,10 @@
 					if (ca.activity.parentUIID == optionalOnCanvas[i].activity.activityUIID){
 						if (optionalOnCanvas[i].locked == false){
 							
-							if (ca._x > 142 || ca._x < -129 || ca._y < -55 || ca._y > optionalOnCanvas[i].getpanelHeight){
+							if (ca._x > 142 || 
+								ca._x < -129 || 
+								ca._y < -55 || 
+								ca._y > optionalOnCanvas[i].panelHeight) {
 								//give it the new co-ords and 'drop' it
 								ca.activity.xCoord = (_xmouse - _canvasModel.getPosition().x) - (_canvasModel.getCanvas().taWidth/2);
 								ca.activity.yCoord = (_ymouse - _canvasModel.getPosition().y) - (_canvasModel.getCanvas().taHeight/2);
@@ -162,6 +165,7 @@
 				
 				for (var i=0; i<optionalOnCanvas.length; i++) {
 					if (sequenceActivity.parentUIID == optionalOnCanvas[i].activity.activityUIID) {
+						
 						if(_tempSelectedItem.activity.parentUIID == sequenceActivity.activityUIID) {
 							ca.depthHistory = ca.getDepth();
 							ca.swapDepths(DepthManager.kTop);
@@ -172,8 +176,22 @@
 							ca.swapDepths(DepthManager.kTop);
 						}
 							
-						if (optionalOnCanvas[i].locked == false)
-							activitySnapBack(ca);
+						if (optionalOnCanvas[i].locked == false) {
+							if (ca._x > optionalOnCanvas[i].getVisibleWidth() || 
+								ca._x < -ca.getVisibleWidth() ||
+								ca._y < -ca.getVisibleHeight() - sequenceActivity.yCoord ||
+								ca._y > optionalOnCanvas[i].getVisibleHeight() - sequenceActivity.yCoord) {
+								
+								ca.activity.xCoord = (_xmouse - _canvasModel.getPosition().x) - (_canvasModel.getCanvas().taWidth/2);
+								ca.activity.yCoord = (_ymouse - _canvasModel.getPosition().y) - (_canvasModel.getCanvas().taHeight/2);
+								
+								_canvasModel.removeOptionalSequenceCA(ca, optionalOnCanvas[i].activity.activityUIID);
+								
+							} else {
+								activitySnapBack(ca);
+							}
+						
+						}
 							
 					}
 					
Index: lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasModel.as
===================================================================
diff -u -r72685d659861b2cc84b109799cc20738ae839fad -r0379c3c050496e1bd6fc6406ae13221ff11bc937
--- lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasModel.as	(.../CanvasModel.as)	(revision 72685d659861b2cc84b109799cc20738ae839fad)
+++ lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasModel.as	(.../CanvasModel.as)	(revision 0379c3c050496e1bd6fc6406ae13221ff11bc937)
@@ -387,6 +387,19 @@
 		setDirty();
 		
 	}
+	
+	public function removeOptionalSequenceCA(ca:Object, parentID){
+		
+		ca.activity.parentUIID = (activeView instanceof CanvasBranchView) ? activeView.defaultSequenceActivity.activityUIID : null;
+		ca.activity.orderID = null;
+		ca.activity.parentActivityID = (activeView instanceof CanvasBranchView) ? activeView.defaultSequenceActivity.activityID : null;
+		
+		getCanvas().ddm.removeTransitionByConnection(ca.activity.activityUIID);
+		
+		removeActivity(parentID);
+		
+		setDirty();
+	}
 	 
 	/**
 	*Called by the controller when a complex activity is dropped on bin.
Index: lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasOptionalActivity.as
===================================================================
diff -u -r72685d659861b2cc84b109799cc20738ae839fad -r0379c3c050496e1bd6fc6406ae13221ff11bc937
--- lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasOptionalActivity.as	(.../CanvasOptionalActivity.as)	(revision 72685d659861b2cc84b109799cc20738ae839fad)
+++ lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasOptionalActivity.as	(.../CanvasOptionalActivity.as)	(revision 0379c3c050496e1bd6fc6406ae13221ff11bc937)
@@ -68,7 +68,7 @@
 	private var _activity:Activity;
 	private var _children:Array;
 	private var children_mc:Array;
-	private var panelHeight:Number;
+	private var _panelHeight:Number;
 	private var actMinOptions:Number;
 	private var actMaxOptions:Number;
 	private var noSeqActivities:Number;
@@ -311,7 +311,7 @@
 	private function draw (){
 		
 		var numOfChildren = _children.length;
-		panelHeight = CHILD_OFFSET_Y + (numOfChildren * CHILD_INCRE);
+		_panelHeight = CHILD_OFFSET_Y + (numOfChildren * CHILD_INCRE);
 		
 		setStyles();
 		
@@ -437,8 +437,8 @@
 		return children_mc;
 	}
 	
-	public function get getpanelHeight():Number {
-		return panelHeight;
+	public function get panelHeight():Number {
+		return _panelHeight;
 	}
 	
 	private function getAssociatedStyle():Object{
Index: lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasSequenceActivity.as
===================================================================
diff -u -rce218d842869d1155caac214e8c8e4cfadde0642 -r0379c3c050496e1bd6fc6406ae13221ff11bc937
--- lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasSequenceActivity.as	(.../CanvasSequenceActivity.as)	(revision ce218d842869d1155caac214e8c8e4cfadde0642)
+++ lams_flash/src/central/flash/org/lamsfoundation/lams/authoring/cv/CanvasSequenceActivity.as	(.../CanvasSequenceActivity.as)	(revision 0379c3c050496e1bd6fc6406ae13221ff11bc937)
@@ -173,6 +173,12 @@
 		
 			if(i == 0)
 				SequenceActivity(_activity).firstActivityUIID = children_mc[i].activity.activityUIID;
+			
+			var transitionObj:Object = _canvasModel.getCanvas().ddm.getTransitionsForActivityUIID(children_mc[i].activity.activityUIID)
+			if(!transitionObj.hasTrans)
+				if(i<_children.length-1)
+					_canvasModel.createSequenceTransition(_activity, children_mc[i].activity.activityUIID);
+			
 			//set the positioning co-ords
 			children_mc[i].activity.xCoord = CHILD_OFFSET_X + (i * CHILD_INCRE);
 			children_mc[i].activity.yCoord = CHILD_OFFSET_Y;