The following grid image is 100 pixels wide by 100 pixels high. It has a 1px dotted red border around it and a padding-left and padding-top of 150 pixels. In Internet Explorer 6 and in Internet Explorer 7, the property event.offsetX/event.offsetY return the mouse coordinates within the target element according to the padding box, not according to the content box.

Steps to reproduce: Click exactly inside the green square exactly in the middle of the grid.

Expected results: event.offsetX should be 200 (not 50), event.offsetY should be 200 (not 50).

event.offsetX
event.offsetY

event.offsetX property definition at MSDN2

CSSOM View Module Reference (W3C Working Draft 22 February 2008) states:
The offsetX attribute, on getting, must return the horizontal coordinate, as number of CSS pixels, of the position where the event occurred relative to the origin of the padding box of the target node.
The offsetY attribute, on getting, must return the vertical coordinate, as number of CSS pixels, of the position where the event occurred relative to the origin of the padding box of the target node.

Internet Explorer 6, Internet Explorer 7, Safari 3.1, Konqueror 3.5.8 all pass this test.