Dude, you are the man! This has been driving me nuts for about 2 hours now.
Apparently the problem is caused by having html overflow-y set to scroll. Although it stick doesn't work for me a lot of the time when elements have padding. It's infuriating.
EDIT: Bugger. Interface is no longer supported, and bugs out with the later versions of jQuery.
EDIT2: OK, so you can solve all the bugs with jQuery sortable by doing these 2 things:
1 - make sure the html elements does have overflow-y:scroll
2 - ensure that none of the parent elements to the sortable have position:relative
I am now using the latest version of jQuery and jQuery UI and all is good (but I have no idea why they don't TELL you on the same page, or have a "Bugs" tab. Dumb)