Answer
On ArcGIS 9.2 Service Pack 4, the Overview Map introduced a new property, called StaticMode. When set to True, the Overview Map becomes static and only requests a single image from the server during the session life of the Web application. Additionally, the end user can no longer interact with (drag or resize) the area of interest box on the Overview Map.
To enable the interactive behavior, StaticMode can be changed to False in Visual Studio or a text editor. However, when StaticMode is False, the Overview Map can potentially request a new image on each extent and scale change in the associated Map control. This can impact the performance of the application.
At version 9.3, the default value for StaticMode is True. Thus, in any new Web Applications that are created, the area of interest box will not be interactive unless StaticMode is set to False.
Note:
The StaticMode property is not exposed in Manager.