The problem seems to be that during normal painting in response to OnPaint the control draws only the ActiveItem on top, while during MouseMove painting it draws all selected items on top to better show what's being moved. When a container's highlight state changes, it manages to invalidate the view, getting WM_PAINT / OnPaint notification in between the mouse move ones and causing flickering if containers are higher in the Z order. For the time being you could override the view's OnPaint to always draw the modified items on top:

class MyView : DiagramView
{
	protected override void OnPaint(PaintEventArgs pe)
	{
		base.OnPaint(pe);

		if (Diagram.Interaction != null)
		{
			var g = new GdiGraphics(pe.Graphics);
			g.PageUnit = Diagram.MeasureUnit;
			float scale = ZoomFactor / 100F;
			g.ScaleTransform(scale, scale);
			g.TranslateTransform(-ScrollX, -ScrollY);

			// this is usually called only from MouseMove
			Diagram.DrawInteraction(
				g, new RenderOptions(), pe.ClipRectangle);
		}
	}
} 

Our developers will try to fix this for the next release in a couple of weeks.

I hope that helps,
Stoyan