In the MouseMove event handler, if we are drawing then erase the previous rectangle and draw the new one.

In the MouseUp event handler, stop drawing and make the rectangle permanent.

The DrawShape subroutine separates the drawing from the mouse interactions so it is easy to change the rubberband shape.

Option Explicit

Private m_Drawing As Boolean
Private m_X1 As Single
Private m_Y1 As Single
Private m_X2 As Single
Private m_Y2 As Single

' Start drawing.
Private Sub picCanvas_MouseDown(Button As Integer, Shift As _
    Integer, X As Single, Y As Single)
    If Button And vbRightButton Then
        ' It's the right button. Cancel the draw.
        If m_Drawing Then
            ' Erase the previous shape.
            DrawShape

            ' Stop drawing.
            m_Drawing = False
            picCanvas.DrawMode = vbCopyPen
            picCanvas.DrawStyle = vbSolid
        End If
    Else
        ' Start drawing.
        m_Drawing = True
        picCanvas.DrawMode = vbInvert
        picCanvas.DrawStyle = vbDot
        m_X1 = X
        m_Y1 = Y
        m_X2 = X
        m_Y2 = Y

        ' Draw the first shape.
        DrawShape
    End If
End Sub

' Continue drawing.
Private Sub picCanvas_MouseMove(Button As Integer, Shift As _
    Integer, X As Single, Y As Single)
    ' Do nothing if we're not drawing.
    If Not m_Drawing Then Exit Sub

    ' Erase the previous shape.
    DrawShape

    ' Save the new point.
    m_X2 = X
    m_Y2 = Y

    ' Draw the new shape.
    DrawShape
End Sub

' Finish drawing.
Private Sub picCanvas_MouseUp(Button As Integer, Shift As _
    Integer, X As Single, Y As Single)
    ' Do nothing if we're not drawing.
    If Not m_Drawing Then Exit Sub

    ' Erase the previous shape.
    DrawShape

    ' Stop drawing.
    m_Drawing = False
    picCanvas.DrawMode = vbCopyPen
    picCanvas.DrawStyle = vbSolid

    ' Save the new point.
    m_X2 = X
    m_Y2 = Y

    ' Make the shape permanant. This might involve saving
    ' coordinates to a database or something. In this case,
    ' it just means redrawing the shape in non-invert mode.
    DrawShape
End Sub

' Draw the shape in the area defined by the points
' (m_X1, m_Y1) and (m_X2, m_Y2).
Private Sub DrawShape()
    picCanvas.Line (m_X1, m_Y1)-(m_X2, m_Y2), , B
End Sub