Code

function findOverlaps(modifiedNode, minDist)
{
	var bounds = modifiedNode.getBounds();
	bounds.inflate(minDist - 1, minDist - 1);

	var overlaps = [];
	for (var i = 0; i < diagram.nodes.length; i++)
	{
		var node = diagram.nodes[i];
		if (modifiedNode == node)
			continue;
		if (bounds.intersectsWith(node.getBounds()))
			overlaps.push(node);
	}
	return overlaps;
} 

Code

function removeOverlaps(modifiedNode, minDist)
{
	var queue = [];
	queue.push(modifiedNode);

	while (queue.length > 0)
	{
		var node = queue.shift();
		var nodeCenter = node.getCenter();

		var overlaps = findOverlaps(node, minDist);
		for (var i = 0; i < overlaps.length; i++)
		{
			var overlap = overlaps[i];
			var ovrCenter = overlap.getCenter();
			var ovrBounds = overlap.getBounds().clone();
			var dx = ovrCenter.x - nodeCenter.x;
			var dy = ovrCenter.y - nodeCenter.y;
			//if (Math.abs(dx) > Math.abs(dy))
			{
				// offset horizontally
				ovrBounds.x = node.bounds.right() + minDist;
			}
			//else
			{
				// offset vertically
				//ovrBounds.y = node.bounds.bottom() + minDist;
			}

			// shifting the node might introduce new overlaps, continue processing
			overlap.setBounds(ovrBounds, true);
			queue.push(overlap);
		}
	}
}