Moving From Dynamic Module to Manipulate

In trying to implement Vitaly's suggestion about how to take control of Locator events, I have been able to make headway using DynamicModule. However, the ultimate destination is a demonstration, so I'd like to make the code work in Manipulate.

The Code

The following pared-down version works fine. It places 5 locators in a coordinate space with x and y axes displayed.

DynamicModule[{p1 = {0, 2}, p2 = {2, 0}, p3 = {4, -3}, p4 = {-3, 3}, p5 = {1, 1}},
EventHandler[

dQ[p_, q_] := EuclideanDistance[p, MousePosition["Graphics"]] < 
EuclideanDistance[q, MousePosition["Graphics"]];
Dynamic[
 Style[Graphics[{
  {Red, Disk[{0, Round@p1[[2]]}, .2]},
  {Blue, Disk[Round@p2, .2]},
  {Green, Disk[p3, .2]},
  {Brown, Disk[p4, .2]},
  GraphicsGroup[{Black, Line[{.1 {0, 1.5} + p5, .1 {0, 3} + p5}], 
    Line[{.1 {0, -1.5} + p5, .1 {0, -3} + p5}], 

    Line[{.1 {-1.5, 0} + p5, .1 {-3, 0} + p5}], 
    Line[{.1 {1.5, 0} + p5, .1 {3, 0} + p5}], 
    Circle[{0, 0} + p5, .2], Gray, Disk[p5, .1]}]},
 PlotRange -> 5, Axes -> True],Selectable -> False]],
 {"MouseDragged" :>
  (Which[
  dQ[p1, p2] && dQ[p1, p3] && dQ[p1, p4] && dQ[p1, p5], 
  p1 = MousePosition["Graphics"],
  dQ[p2, p1] && dQ[p2, p3] && dQ[p2, p4] && dQ[p2, p5], 
  p2 = MousePosition["Graphics"],

  dQ[p3, p1] && dQ[p3, p2] && dQ[p3, p4] && dQ[p3, p5], 
  p3 = MousePosition["Graphics"],
  dQ[p4, p1] && dQ[p4, p2] && dQ[p4, p3] && dQ[p4, p5], 
  p4 = MousePosition["Graphics"],
  dQ[p5, p1] && dQ[p5, p2] && dQ[p5, p3] && dQ[p5, p4], 
  p5 = MousePosition["Graphics"]])}]]

Moving to Manipulate

The issue is really quite simple. How can I successfully wrap this code in Manipulate? I've tried this:

 Manipulate[ 

   ,
   {x,1,12,Slider} ]

[The slider serves no purpose at the moment.]

What happens

The manipulate screen appears as expected. However, evaluation goes into a loop. The cell right bracket blinks endlessly.

What causes this loop? Why doesn't it occur when I use DynamicModule without Manipulate?

Answer

You shouldn't have initialization code inside of the Manipulate. You're defining the function dQ inside the Manipulate, and by moving that definition to the Initialization option of Manipulate, you can make this behave much better.

Manipulate[

 DynamicModule[{p1 = {0, 2}, p2 = {2, 0}, p3 = {4, -3}, p4 = {-3, 3}, 
   p5 = {1, 1}}, EventHandler[
   Dynamic[
    Style[Graphics[{{Red, Disk[{0, Round@p1[[2]]}, .2]}, {Blue, 
        Disk[Round@p2, .2]}, {Green, Disk[p3, .2]}, {Brown, 
        Disk[p4, .2]}, 
       GraphicsGroup[{Black, Line[{.1 {0, 1.5} + p5, .1 {0, 3} + p5}],
          Line[{.1 {0, -1.5} + p5, .1 {0, -3} + p5}], 
         Line[{.1 {-1.5, 0} + p5, .1 {-3, 0} + p5}], 
         Line[{.1 {1.5, 0} + p5, .1 {3, 0} + p5}], 

         Circle[{0, 0} + p5, .2], Gray, Disk[p5, .1]}]}, 
      PlotRange -> 5, Axes -> True], 
     Selectable -> 
      False]], {"MouseDragged" :> (Which[
       dQ[p1, p2] && dQ[p1, p3] && dQ[p1, p4] && dQ[p1, p5], 
       p1 = MousePosition["Graphics"], 
       dQ[p2, p1] && dQ[p2, p3] && dQ[p2, p4] && dQ[p2, p5], 
       p2 = MousePosition["Graphics"], 
       dQ[p3, p1] && dQ[p3, p2] && dQ[p3, p4] && dQ[p3, p5], 
       p3 = MousePosition["Graphics"], 

       dQ[p4, p1] && dQ[p4, p2] && dQ[p4, p3] && dQ[p4, p5], 
       p4 = MousePosition["Graphics"], 
       dQ[p5, p1] && dQ[p5, p2] && dQ[p5, p3] && dQ[p5, p4], 
       p5 = MousePosition["Graphics"]])}]], {x, 1, 12, Slider}, 
 Initialization :> (dQ[p_, q_] := 
    EuclideanDistance[p, MousePosition["Graphics"]] < 
     EuclideanDistance[q, MousePosition["Graphics"]])]

EDIT:

I should say something else about this answer. I answered the question you asked, but the way I answered it exposes another potential problem. Manipulate wraps its entire contents in a Dynamic. If that outer Dynamic happens to re-trigger, it will recreate the DynamicModule and reinitialize all of your DynamicModule variables. This would certainly happen when you close and reopen the notebook. It could also happen if you add dependencies to the Manipulate variables outside of the inner Dynamic. So, really, a better version of my answer would be to move the DynamicModule out of the Manipulate like this:

DynamicModule[{p1 = {0, 2}, p2 = {2, 0}, p3 = {4, -3}, p4 = {-3, 3}, 
  p5 = {1, 1}}, Manipulate[EventHandler[
   Dynamic[
    Style[Graphics[{{Red, Disk[{0, Round@p1[[2]]}, .2]}, {Blue, 
        Disk[Round@p2, .2]}, {Green, Disk[p3, .2]}, {Brown, 
        Disk[p4, .2]}, 
       GraphicsGroup[{Black, Line[{.1 {0, 1.5} + p5, .1 {0, 3} + p5}],
          Line[{.1 {0, -1.5} + p5, .1 {0, -3} + p5}], 
         Line[{.1 {-1.5, 0} + p5, .1 {-3, 0} + p5}], 
         Line[{.1 {1.5, 0} + p5, .1 {3, 0} + p5}], 

         Circle[{0, 0} + p5, .2], Gray, Disk[p5, .1]}]}, 
      PlotRange -> 5, Axes -> True], 
     Selectable -> 
      False]], {"MouseDragged" :> (Which[
       dQ[p1, p2] && dQ[p1, p3] && dQ[p1, p4] && dQ[p1, p5], 
       p1 = MousePosition["Graphics"], 
       dQ[p2, p1] && dQ[p2, p3] && dQ[p2, p4] && dQ[p2, p5], 
       p2 = MousePosition["Graphics"], 
       dQ[p3, p1] && dQ[p3, p2] && dQ[p3, p4] && dQ[p3, p5], 
       p3 = MousePosition["Graphics"], 

       dQ[p4, p1] && dQ[p4, p2] && dQ[p4, p3] && dQ[p4, p5], 
       p4 = MousePosition["Graphics"], 
       dQ[p5, p1] && dQ[p5, p2] && dQ[p5, p3] && dQ[p5, p4], 
       p5 = MousePosition["Graphics"]])}], {x, 1, 12, Slider}, 
  Initialization :> (dQ[p_, q_] := 
     EuclideanDistance[p, MousePosition["Graphics"]] < 
      EuclideanDistance[q, MousePosition["Graphics"]])]]