Jquery Dialog and Div Position

Answer 1

You should really be positioning the dialog through the jQuery UI Dialog attributes - remove the style attributes you have specified in the div.

Answer 2

You can try to wrap the dialog in another absolute positioned div:

<div id="wrapper" style="position: absolute; left: 70px; top: 66px; width: 161px; height: 160px; z-index: 1">
    <div id="layer2">test layer</div>
</div>

On the other hand, I think you can specify the behaviour with the dialog options:

$('#layer2').dialog({ position: '[66,77]', draggable: false, width: 161, height: 160 });

See http://docs.jquery.com/UI/Dialog for the full Dialog option list.