FULL PRODUCT VERSION :
java version "1.6.0_11"
Java(TM) SE Runtime Environment (build 1.6.0_11-b03)
Java HotSpot(TM) Client VM (build 11.0-b16, mixed mode, sharing)

ADDITIONAL OS VERSION INFORMATION :
Microsoft Windows XP [Version 5.1.2600]

A DESCRIPTION OF THE PROBLEM :
In an AWT application with a canvas and FileDialog when the FileDialog is positioned over the canvas and the user double-click on a file to open it a MOUSE_DRAGGED event is generated on the canvas.

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
Start application, select load from the File menu, position dialog so its over the white canvas. Double-click on a file which is over the canvas.

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
No MOUSE_DRAGGED/MOUSE_RELEASED events generated.
ACTUAL -
1233773918625 Load
1233773923843 C:\eclipse\workspace\wallpaper\simpleImages\/verticleLine.png
1233773923937 Load finished
1233773923843 java.awt.event.MouseEvent[MOUSE_ENTERED,(111,125),absolute(361,172),button=0,modifiers=Button1,extModifiers=Button1,clickCount=0] on canvas0
1233773923843 java.awt.event.MouseEvent[MOUSE_DRAGGED,(111,125),absolute(361,172),button=0,modifiers=Button1,extModifiers=Button1,clickCount=0] on canvas0
1233773923906 java.awt.event.MouseEvent[MOUSE_RELEASED,(111,125),absolute(361,172),button=1,modifiers=Button1,clickCount=0] on canvas0


REPRODUCIBILITY :
This bug can be reproduced always.

---------- BEGIN SOURCE ----------
import java.awt.Canvas;
import java.awt.Color;
import java.awt.FileDialog;
import java.awt.Frame;
import java.awt.Menu;
import java.awt.MenuBar;
import java.awt.MenuItem;
import java.awt.Panel;
import java.awt.event.ActionEvent;
import java.awt.event.ActionListener;
import java.awt.event.MouseEvent;
import java.awt.event.MouseListener;
import java.awt.event.MouseMotionListener;

public class MouseDraggedBug extends Panel implements ActionListener, MouseMotionListener, MouseListener {
    private static final long serialVersionUID = 1L;
    Frame frame;
    
    public MouseDraggedBug(Frame frame) {
        this.frame = frame;
    }

    public static void main(String progargs[]) {
        Frame mainFrame = new Frame("Wallpaper patterns");
        int w=800,h=600;
        mainFrame.setBounds(0, 0, w, h);
        MouseDraggedBug app = new MouseDraggedBug(mainFrame);
        mainFrame.add(app);
        mainFrame.setMenuBar(app.buildMenu());
        app.init();
        mainFrame.setVisible(true);
    }

    public MenuBar buildMenu() {
        MenuBar mb = new MenuBar();

        Menu fileMenu = new Menu("File");

        MenuItem loadMI = new MenuItem("Load");
        loadMI.addActionListener(this);
        fileMenu.add(loadMI);
        mb.add(fileMenu);
        return mb;
    }

    
    public void init() {
         this.setBackground(Color.DARK_GRAY);
         Canvas c = new Canvas();
         c.setSize(300, 300);
         c.setBackground(Color.WHITE);
         c.addMouseMotionListener(this);
         c.addMouseListener(this);
         this.add(c);
         this.validate();
    }

    @Override
    public void actionPerformed(ActionEvent e) {
        System.out.println(""+System.currentTimeMillis()+"\tLoad");
        FileDialog fd = new FileDialog(frame, "Load image",
                FileDialog.LOAD);
        fd.setVisible(true);
        String dir = fd.getDirectory();
        String filename = fd.getFile();
        System.out.println(""+System.currentTimeMillis()+"\t"+dir+"/"+filename);
        try {
            Thread.sleep(100);
        } catch (InterruptedException e1) {
            e1.printStackTrace();
        }
        System.out.println(""+System.currentTimeMillis()+"\tLoad finished");
    }

    @Override
    public void mouseDragged(MouseEvent e) {
        System.out.println(""+e.getWhen()+"\t"+e);
    }

    @Override
    public void mouseMoved(MouseEvent e) {
        System.out.println(""+e.getWhen()+"\t"+e);
    }

    @Override
    public void mouseClicked(MouseEvent e) {
        System.out.println(""+e.getWhen()+"\t"+e);
    }

    @Override
    public void mouseEntered(MouseEvent e) {
        System.out.println(""+e.getWhen()+"\t"+e);
    }

    @Override
    public void mouseExited(MouseEvent e) {
        System.out.println(""+e.getWhen()+"\t"+e);
    }

    @Override
    public void mousePressed(MouseEvent e) {
        System.out.println(""+e.getWhen()+"\t"+e);
    }

    @Override
    public void mouseReleased(MouseEvent e) {
        System.out.println(""+e.getWhen()+"\t"+e);
    }
}
---------- END SOURCE ----------

CUSTOMER SUBMITTED WORKAROUND :
Maintain a private boolean flag recording MousePressed/MouseReleased status.
Disregard MouseDragged events unless proceeded by a MousePressed.