How to draw lines inside a Canvas with coordinates found at runtime


I am new to ActionScript, so would appreciate any help I could get.
I have a panel(say P1) and 2 canvas on it (say C1 and C2). C1 contains few Images. During runtime, user can drag and drop these Images onto the Canvas C2. This creates a new Image of the dragged Image and adds it to C2. All is fine till here.

After dragging I need to draw lines between the 2 images I dragged in C2. This is where my problem starts. Mouse Click captures the event and correct target (target has to be the Image on the Canvas C2). However I am unable to draw lines with correct co-ordinates.

I am trying to use the Graphics.lineTo methods. I have tried using Graphics from the Image, C2 and also from a newly create Shape, but of no use. I get co-ordinates from the mouseclick event’s target (x,y, StageX, StageY, converted using localToGlobal and/or contentTo Global), but of no use. Can someone with this knowledge give me any information please? What/How do I get the correct co-ordinates in this scenario? Is the underlying basic panel messing up with the co-ordinates I am reading, if so I do I get the correct ones? Am I wrong to be using Graphics.lineTo (I saw HRule object itself, but I need to eventually draw curved lines and Graphics.lineTo gave more features).