One way of doing is to overlay a transparent graph control on top of your UI panel. You can add a cursor to the graph that users can move around. The cursor itself can be transparent, so that it's not visible to users.
Whenever they move the cursor to a new position (by clicking and drawing anywhere in the plot area of the graph), you will receive an EVENT_COMMIT in the graph's callback. In that callback, you can get the graph cursor position, expressed in graph units. You can then call the PlotArc function using the position of the graph cursor as a guide.
There are a couple of issues to keep in mind. One is performance: plotting to a transparent graph is going to be slower than plotting to a normal graph. This will probably be okay, since you'll only be plotting a single plot occasionally, which is not very intensive. The other issue is where in the z-plane order to place the graph. The best solution here depends on the rest of your panel... if you place the graph at the top of the z-plane, users will be able to operate the graph cursor no matter where they click, but they will not be able to interact with the other controls in your panel using the mouse. The other possibility is to place the graph at the bottom of the z-plane order (in which case it won't even have to be transparent). The drawback here is that they will only be able to grab the cursor if they click on the panel (in between other controls). Also, the arc would be clipped by the other controls. A possible compromise would be for you to require them to do some special mouse-button combination to move the plot. You could catch this combination in the panel callback, and then bring the graph to the top at that exact instant, so that the graph gets the event, instead of some other control.
One last thing... you can also do this using a canvas control instead of a graph. The downside is that you don't have cursors, so you'd have to use the extended mouse events from the toolbox, but the upside is that you don't have to worry about graph units. You can deal with pixels directly. The canvas would also be faster.
Hope this gives you something to get started.
Luis
NI