Modified jQuery UI Nested Sortable that tests jQuery UI version. If greater than 1.9.2, it uses different code which is compatible with draggable and connectedSortable.

jquery.ui.nestedSortable

/*
 * jQuery UI Nested Sortable
 * v 1.3.6 / 20 May 2013
 * http://mjsarfatti.com/code/nestedSortable
 *
 * Depends on:
 *   jquery.ui.sortable.js 1.8+
 *
 * Copyright (c) 2010-2012 Manuele J Sarfatti
 * Licensed under the MIT License
 * http://www.opensource.org/licenses/mit-license.php
 * 
 * Modified for compatibility
 */

(function($) {

	$.widget("mjs.nestedSortable", $.extend({}, $.ui.sortable.prototype, {

		options: {
			tabSize: 20,
			disableNesting: 'mjs-nestedSortable-no-nesting',
			errorClass: 'mjs-nestedSortable-error',
			doNotClear: false,
			listType: 'ol',
			maxLevels: 0,
			protectRoot: false,
			rootID: null,
			rtl: false,
			isAllowed: function(item, parent) { return true; }
		},

		_create: function() {
		
			if ( $.isVersion( '1.9.2', '>' ) )
				this.element.data('ui-sortable', this.element.data('mjs-nestedSortable'));
			else
				this.element.data('sortable', this.element.data('nestedSortable'));

			if (!this.element.is(this.options.listType))
				throw new Error('nestedSortable: Please check the listType option is set to your actual list type');

			return $.ui.sortable.prototype._create.apply(this, arguments);
		},

		destroy: function() {
			this.element
				.removeData("nestedSortable")
				.unbind(".nestedSortable");
			return $.ui.sortable.prototype.destroy.apply(this, arguments);
		},

		_mouseDrag: function(event) {

			//Compute the helpers position
			this.position = this._generatePosition(event);
			this.positionAbs = this._convertPositionTo("absolute");

			if (!this.lastPositionAbs) {
				this.lastPositionAbs = this.positionAbs;
			}

			var o = this.options;

			//Do scrolling
			if(this.options.scroll) {
				var scrolled = false;
				if(this.scrollParent[0] != document && this.scrollParent[0].tagName != 'HTML') {

					if((this.overflowOffset.top + this.scrollParent[0].offsetHeight) - event.pageY < o.scrollSensitivity)
						this.scrollParent[0].scrollTop = scrolled = this.scrollParent[0].scrollTop + o.scrollSpeed;
					else if(event.pageY - this.overflowOffset.top < o.scrollSensitivity)
						this.scrollParent[0].scrollTop = scrolled = this.scrollParent[0].scrollTop - o.scrollSpeed;

					if((this.overflowOffset.left + this.scrollParent[0].offsetWidth) - event.pageX < o.scrollSensitivity)
						this.scrollParent[0].scrollLeft = scrolled = this.scrollParent[0].scrollLeft + o.scrollSpeed;
					else if(event.pageX - this.overflowOffset.left < o.scrollSensitivity)
						this.scrollParent[0].scrollLeft = scrolled = this.scrollParent[0].scrollLeft - o.scrollSpeed;

				} else {

					if(event.pageY - $(document).scrollTop() < o.scrollSensitivity)
						scrolled = $(document).scrollTop($(document).scrollTop() - o.scrollSpeed);
					else if($(window).height() - (event.pageY - $(document).scrollTop()) < o.scrollSensitivity)
						scrolled = $(document).scrollTop($(document).scrollTop() + o.scrollSpeed);

					if(event.pageX - $(document).scrollLeft() < o.scrollSensitivity)
						scrolled = $(document).scrollLeft($(document).scrollLeft() - o.scrollSpeed);
					else if($(window).width() - (event.pageX - $(document).scrollLeft()) < o.scrollSensitivity)
						scrolled = $(document).scrollLeft($(document).scrollLeft() + o.scrollSpeed);

				}

				if(scrolled !== false && $.ui.ddmanager && !o.dropBehaviour)
					$.ui.ddmanager.prepareOffsets(this, event);
			}

			//Regenerate the absolute position used for position checks
			this.positionAbs = this._convertPositionTo("absolute");

      // Find the top offset before rearrangement,
      var previousTopOffset = this.placeholder.offset().top;

			//Set the helper position
			if(!this.options.axis || this.options.axis != "y") this.helper[0].style.left = this.position.left+'px';
			if(!this.options.axis || this.options.axis != "x") this.helper[0].style.top = this.position.top+'px';

			//Rearrange
			for (var i = this.items.length - 1; i >= 0; i--) {

				//Cache variables and intersection, continue if no intersection
				var item = this.items[i], itemElement = item.item[0], intersection = this._intersectsWithPointer(item);
				if (!intersection) continue;

				if(itemElement != this.currentItem[0] //cannot intersect with itself
					&&	this.placeholder[intersection == 1 ? "next" : "prev"]()[0] != itemElement //no useless actions that have been done before
					&&	!$.contains(this.placeholder[0], itemElement) //no action if the item moved is the parent of the item checked
					&& (this.options.type == 'semi-dynamic' ? !$.contains(this.element[0], itemElement) : true)
					//&& itemElement.parentNode == this.placeholder[0].parentNode // only rearrange items within the same container
				) {

					$(itemElement).mouseenter();

					this.direction = intersection == 1 ? "down" : "up";

					if (this.options.tolerance == "pointer" || this._intersectsWithSides(item)) {
						$(itemElement).mouseleave();
						this._rearrange(event, item);
					} else {
						break;
					}

					// Clear emtpy ul's/ol's
					this._clearEmpty(itemElement);

					this._trigger("change", event, this._uiHash());
					break;
				}
			}

			var parentItem = (this.placeholder[0].parentNode.parentNode &&
							 $(this.placeholder[0].parentNode.parentNode).closest('.ui-sortable').length)
				       			? $(this.placeholder[0].parentNode.parentNode)
				       			: null,
			    level = this._getLevel(this.placeholder),
			    childLevels = this._getChildLevels(this.helper);

      // To find the previous sibling in the list, keep backtracking until we hit a valid list item.
			var previousItem = this.placeholder[0].previousSibling ? $(this.placeholder[0].previousSibling) : null;
			if (previousItem != null) {
				while (previousItem[0].nodeName.toLowerCase() != 'li' || previousItem[0] == this.currentItem[0] || previousItem[0] == this.helper[0]) {
					if (previousItem[0].previousSibling) {
						previousItem = $(previousItem[0].previousSibling);
					} else {
						previousItem = null;
						break;
					}
				}
			}

      // To find the next sibling in the list, keep stepping forward until we hit a valid list item.
      var nextItem = this.placeholder[0].nextSibling ? $(this.placeholder[0].nextSibling) : null;
      if (nextItem != null) {
        while (nextItem[0].nodeName.toLowerCase() != 'li' || nextItem[0] == this.currentItem[0] || nextItem[0] == this.helper[0]) {
          if (nextItem[0].nextSibling) {
            nextItem = $(nextItem[0].nextSibling);
          } else {
            nextItem = null;
            break;
          }
        }
      }

			var newList = document.createElement(o.listType);

			this.beyondMaxLevels = 0;
			
			// If the item is moved to the left, send it to its parent's level unless there are siblings below it.
			if (parentItem != null && nextItem == null &&
					(o.rtl && (this.positionAbs.left + this.helper.outerWidth() > parentItem.offset().left + parentItem.outerWidth()) ||
					!o.rtl && (this.positionAbs.left < parentItem.offset().left))) {
				parentItem.after(this.placeholder[0]);
				this._clearEmpty(parentItem[0]);
				this._trigger("change", event, this._uiHash());
			}
			// If the item is below a sibling and is moved to the right, make it a child of that sibling.
			else if (previousItem != null &&
						(o.rtl && (this.positionAbs.left + this.helper.outerWidth() < previousItem.offset().left + previousItem.outerWidth() - o.tabSize) ||
						!o.rtl && (this.positionAbs.left > previousItem.offset().left + o.tabSize))) {
				this._isAllowed(previousItem, level, level+childLevels+1);
				if (!previousItem.children(o.listType).length) {
					previousItem[0].appendChild(newList);
				}
        // If this item is being moved from the top, add it to the top of the list.
        if (previousTopOffset && (previousTopOffset <= previousItem.offset().top)) {
          previousItem.children(o.listType).prepend(this.placeholder);
        }
        // Otherwise, add it to the bottom of the list.
        else {
				  previousItem.children(o.listType)[0].appendChild(this.placeholder[0]);
        }
				this._trigger("change", event, this._uiHash());
			}
			else {
				this._isAllowed(parentItem, level, level+childLevels);
			}

			//Post events to containers
			this._contactContainers(event);

			//Interconnect with droppables
			if($.ui.ddmanager) $.ui.ddmanager.drag(this, event);

			//Call callbacks
			this._trigger('sort', event, this._uiHash());

			this.lastPositionAbs = this.positionAbs;
			return false;

		},

		_mouseStop: function(event, noPropagation) {

			// If the item is in a position not allowed, send it back
			if (this.beyondMaxLevels) {

				this.placeholder.removeClass(this.options.errorClass);

				if (this.domPosition.prev) {
					$(this.domPosition.prev).after(this.placeholder);
				} else {
					$(this.domPosition.parent).prepend(this.placeholder);
				}

				this._trigger("revert", event, this._uiHash());

			}

			// Clean last empty ul/ol
			for (var i = this.items.length - 1; i >= 0; i--) {
				var item = this.items[i].item[0];
				this._clearEmpty(item);
			}

			$.ui.sortable.prototype._mouseStop.apply(this, arguments);

		},

		serialize: function(options) {

			var o = $.extend({}, this.options, options),
				items = this._getItemsAsjQuery(o && o.connected),
			    str = [];

			$(items).each(function() {
				var res = ($(o.item || this).attr(o.attribute || 'id') || '')
						.match(o.expression || (/(.+)[-=_](.+)/)),
				    pid = ($(o.item || this).parent(o.listType)
						.parent(o.items)
						.attr(o.attribute || 'id') || '')
						.match(o.expression || (/(.+)[-=_](.+)/));

				if (res) {
					str.push(((o.key || res[1]) + '[' + (o.key && o.expression ? res[1] : res[2]) + ']')
						+ '='
						+ (pid ? (o.key && o.expression ? pid[1] : pid[2]) : o.rootID));
				}
			});

			if(!str.length && o.key) {
				str.push(o.key + '=');
			}

			return str.join('&');

		},

		toHierarchy: function(options) {

			var o = $.extend({}, this.options, options),
				sDepth = o.startDepthCount || 0,
			    ret = [];

			$(this.element).children(o.items).each(function () {
				var level = _recursiveItems(this);
				ret.push(level);
			});

			return ret;

			function _recursiveItems(item) {
				var id = ($(item).attr(o.attribute || 'id') || '').match(o.expression || (/(.+)[-=_](.+)/));
				if (id) {
					var currentItem = {"id" : id[2]};
					if ($(item).children(o.listType).children(o.items).length > 0) {
						currentItem.children = [];
						$(item).children(o.listType).children(o.items).each(function() {
							var level = _recursiveItems(this);
							currentItem.children.push(level);
						});
					}
					return currentItem;
				}
			}
		},

		toArray: function(options) {

			var o = $.extend({}, this.options, options),
				sDepth = o.startDepthCount || 0,
			    ret = [],
			    left = 2;

			ret.push({
				"item_id": o.rootID,
				"parent_id": 'none',
				"depth": sDepth,
				"left": '1',
				"right": ($(o.items, this.element).length + 1) * 2
			});

			$(this.element).children(o.items).each(function () {
				left = _recursiveArray(this, sDepth + 1, left);
			});

			ret = ret.sort(function(a,b){ return (a.left - b.left); });

			return ret;

			function _recursiveArray(item, depth, left) {

				var right = left + 1,
				    id,
				    pid;

				if ($(item).children(o.listType).children(o.items).length > 0) {
					depth ++;
					$(item).children(o.listType).children(o.items).each(function () {
						right = _recursiveArray($(this), depth, right);
					});
					depth --;
				}

				id = ($(item).attr(o.attribute || 'id')).match(o.expression || (/(.+)[-=_](.+)/));

				if (depth === sDepth + 1) {
					pid = o.rootID;
				} else {
					var parentItem = ($(item).parent(o.listType)
											 .parent(o.items)
											 .attr(o.attribute || 'id'))
											 .match(o.expression || (/(.+)[-=_](.+)/));
					pid = parentItem[2];
				}

				if (id) {
						ret.push({"item_id": id[2], "parent_id": pid, "depth": depth, "left": left, "right": right});
				}

				left = right + 1;
				return left;
			}

		},

		_clearEmpty: function(item) {

			var emptyList = $(item).children(this.options.listType);
			if (emptyList.length && !emptyList.children().length && !this.options.doNotClear) {
				emptyList.remove();
			}

		},

		_getLevel: function(item) {

			var level = 1;

			if (this.options.listType) {
				var list = item.closest(this.options.listType);
				while (list && list.length > 0 && 
                    	!list.is('.ui-sortable')) {
					level++;
					list = list.parent().closest(this.options.listType);
				}
			}

			return level;
		},

		_getChildLevels: function(parent, depth) {
			var self = this,
			    o = this.options,
			    result = 0;
			depth = depth || 0;

			$(parent).children(o.listType).children(o.items).each(function (index, child) {
					result = Math.max(self._getChildLevels(child, depth + 1), result);
			});

			return depth ? result + 1 : result;
		},

		_isAllowed: function(parentItem, level, levels) {
			var o = this.options,
				isRoot = $(this.domPosition.parent).hasClass('ui-sortable') ? true : false,
				maxLevels = this.placeholder.closest('.ui-sortable').nestedSortable('option', 'maxLevels'); // this takes into account the maxLevels set to the recipient list

			// Is the root protected?
			// Are we trying to nest under a no-nest?
			// Are we nesting too deep?
			if (!o.isAllowed(this.currentItem, parentItem) ||
				parentItem && parentItem.hasClass(o.disableNesting) ||
				o.protectRoot && (parentItem == null && !isRoot || isRoot && level > 1)) {
					this.placeholder.addClass(o.errorClass);
					if (maxLevels < levels && maxLevels != 0) {
						this.beyondMaxLevels = levels - maxLevels;
					} else {
						this.beyondMaxLevels = 1;
					}
			} else {
				if (maxLevels < levels && maxLevels != 0) {
					this.placeholder.addClass(o.errorClass);
					this.beyondMaxLevels = levels - maxLevels;
				} else {
					this.placeholder.removeClass(o.errorClass);
					this.beyondMaxLevels = 0;
				}
			}
		}

	}));

	$.mjs.nestedSortable.prototype.options = $.extend({}, $.ui.sortable.prototype.options, $.mjs.nestedSortable.prototype.options);
})(jQuery);

(function($) {
    /**
     * Used for version test cases.
     * 
     * @param {string} left A string containing the version that will become
     *        the left hand operand.
     * @param {string} oper The comparison operator to test against. By
     *        default, the "==" operator will be used.
     * @param {string} right A string containing the version that will
     *        become the right hand operand. By default, the current jQuery
     *        version will be used.
     *        
     * @return {boolean} Returns the evaluation of the expression, either
     *         true or false.
     */
    $.isVersion = function(left, oper, right) {
        if (left) {
            var pre = /pre/i,
                replace = /[^\d]+/g,
                oper = oper || "==",
                right = right || $.ui.version,
                l = left.replace(replace, ''),
                r = right.replace(replace, ''),
                l_len = l.length, r_len = r.length,
                l_pre = pre.test(left), r_pre = pre.test(right);

            l = (r_len > l_len ? parseInt(l) * Math.pow(10, (r_len - l_len)) : parseInt(l));
	        r = (l_len > r_len ? parseInt(r) * Math.pow(10, (l_len - r_len)) : parseInt(r));
	
	        switch(oper) {
	            case "==": {
	                return (true === (l == r && (l_pre == r_pre)));
	            }
	            case ">=": {
	                return (true === (l >= r && (!l_pre || l_pre == r_pre)));
	            }
	            case "<=": {
	                return (true === (l <= r && (!r_pre || r_pre == l_pre)));
	            }
	            case ">": {
	                return (true === (l > r || (l == r && r_pre)));
	            }
	            case "<": {
	                return (true === (l < r || (l == r && l_pre)));
	            }
	        }
	    }
	
	    return false;
    }
})(jQuery);