private Image picture;
private Point pictureLocation;

public Form1()
{
   // Enable drag-and-drop operations and 
   // add handlers for DragEnter and DragDrop.
   this.AllowDrop = true;
   this.DragDrop += new DragEventHandler(this.Form1_DragDrop);
   this.DragEnter += new DragEventHandler(this.Form1_DragEnter);
}

protected override void OnPaint(PaintEventArgs e)
{
   // If there is an image and it has a location, 
   // paint it when the Form is repainted.
   base.OnPaint(e);
   if(this.picture != null && this.pictureLocation != Point.Empty)
   {
      e.Graphics.DrawImage(this.picture, this.pictureLocation);
   }
}

private void Form1_DragDrop(object sender, DragEventArgs e)
{
   // Handle FileDrop data.
   if(e.Data.GetDataPresent(DataFormats.FileDrop) )
   {
      // Assign the file names to a string array, in 
      // case the user has selected multiple files.
      string[] files = (string[])e.Data.GetData(DataFormats.FileDrop);
      try
      {
         // Assign the first image to the picture variable.
         this.picture = Image.FromFile(files[0]);
         // Set the picture location equal to the drop point.
         this.pictureLocation = this.PointToClient(new Point(e.X, e.Y) );
      }
      catch(Exception ex)
      {
         MessageBox.Show(ex.Message);
         return;
      }
   }

   // Handle Bitmap data.
   if(e.Data.GetDataPresent(DataFormats.Bitmap) )
   {
      try
      {
         // Create an Image and assign it to the picture variable.
         this.picture = (Image)e.Data.GetData(DataFormats.Bitmap);
         // Set the picture location equal to the drop point.
         this.pictureLocation = this.PointToClient(new Point(e.X, e.Y) );
      }
      catch(Exception ex)
      {
         MessageBox.Show(ex.Message);
         return;
      }
   }
   // Force the form to be redrawn with the image.
   this.Invalidate();
}

private void Form1_DragEnter(object sender, DragEventArgs e)
{
   // If the data is a file or a bitmap, display the copy cursor.
   if (e.Data.GetDataPresent(DataFormats.Bitmap) || 
      e.Data.GetDataPresent(DataFormats.FileDrop) ) 
   {
      e.Effect = DragDropEffects.Copy;
   }
   else
   {
      e.Effect = DragDropEffects.None;
   }
}

// This example creates a PictureBox control on the form and draws to it.
// This example assumes that the Form_Load event handler method is
// connected to the Load event of the form.

private PictureBox pictureBox1 = new PictureBox();
// Cache font instead of recreating font objects each time we paint.
private Font fnt = new Font("Arial",10);
private void Form1_Load(object sender, System.EventArgs e)
{
    // Dock the PictureBox to the form and set its background to white.
    pictureBox1.Dock = DockStyle.Fill;
    pictureBox1.BackColor = Color.White;
    // Connect the Paint event of the PictureBox to the event handler method.
    pictureBox1.Paint += new System.Windows.Forms.PaintEventHandler(this.pictureBox1_Paint);

    // Add the PictureBox control to the Form.
    this.Controls.Add(pictureBox1);
}

private void pictureBox1_Paint(object sender, System.Windows.Forms.PaintEventArgs e)
{
    // Create a local version of the graphics object for the PictureBox.
    Graphics g = e.Graphics;

    // Draw a string on the PictureBox.
    g.DrawString("This is a diagonal line drawn on the control",
        fnt, System.Drawing.Brushes.Blue, new Point(30,30));
    // Draw a line in the PictureBox.
    g.DrawLine(System.Drawing.Pens.Red, pictureBox1.Left, pictureBox1.Top,
        pictureBox1.Right, pictureBox1.Bottom);
}