I guess I should have made this more clear. I'm controlling a sprite using the Touch control. To move the sprite I'm saying:
If TOUCH is touching "Player" then set position of "Player" to Touch X and Touch Y.
This is how I've done it in the past on other engines and assumed it was the proper way to do that here. I'm not using the Drag and Drop behaviors (though I suppose I could try using those).
Anyway, using your suggestion I have to add the inverted collision conditions into that rule so it knows that the object can be moved as long as its not colliding. Therefore the rule now says
If TOUCH is touching "Player"
"Player" is NOT overlapping "Wall"
set position of "Player" to Touch X and Touch Y.
but going this route won't work because like I said, as soon as the object overlaps, the rule goes into effect and stays in effect because nothing is stopping the Player from overlapping the collision creating an endless loop.
There isn't another place to put the NOT command because it has to be with the initial touch control. Does this make more sense? Maybe I'm just not understanding you correctly...