On a page I have an iframe. In this iframe is a collection of items that I need to be sortable. All of the Javascript is being run on the parent page. I can access the list
I don't know why your code isn't working. Looks like it should be.
That said, here are two alternative ways to implement this feature:
If you can modify the iframe
Move your JavaScript from the parent document into iframe-test.html. This may be the cleanest way because it couples the JavaScript with the elements its actually executing on.
http://dl.dropbox.com/u/3287783/snippets/rarayiframe/sortable-test.html
If you only control the parent document
Use the jQuery .load() method to fetch the content instead of an HTML iframe.
http://dl.dropbox.com/u/3287783/snippets/rarayiframe2/sortable-test.html