Please consider the following:
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Source code
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Section "Extensions"
Option "Composite" "Enable"
Option "RENDER" "Enable"
EndSection
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This also improves the composite speed.
Composite however, is an experimental new technology. The lag in dragging the windows is normal and likely caused by the window shadow settings you've enabled with composite. This is something that will eventually disappear when KDE gets full support for the new composite extension.
For now, you use it to impress for friends, but disable it again to make your desktop responsive again. ;-) (either by removing the extensions section from your xorg.conf, or disable the transparency/shadow settings)