gistfile1.js

      // See http://remorse.nl/weblog/get_the_mousecursor_position_relative_to_an_element_with_prototype/
      function relativeEventLocation(event,container){
        if ( container == null ) {
          container = Event.element(event);
        }

        //get the position of the container
        var containerLeft = Position.page(container)[0];
        var containerTop = Position.page(container)[1];

        //get the mouse coordinates
        mouseX = Event.pointerX(event);
        mouseY = Event.pointerY(event);

        //calculate the absolute mouse position in the div
        horizontalPosition = mouseX - containerLeft;
        verticalPosition = mouseY - containerTop;

        //use prototypes function to get the dimension
        //this is a VERY usefull function because it also checks for borders
        containerDimensions = container.getDimensions();
        height   = containerDimensions.height;
        width = containerDimensions.width;

        //check if the mouse is out or inside the div
        if(horizontalPosition < 0 || verticalPosition < 0 || mouseX > (width + containerLeft) || mouseY > (height + containerTop) ){
          return null;
        }

        return { x: horizontalPosition, y: verticalPosition };
      }