How to restrict Users from dragging and dropping an image which exists outside of the DAM (i.e. desktop or other mapped drive) into the parsys of my aem page. I am using the OOTB image component provided by aem using the html5smatimage widget.
make a copy of the foundation image component to your project, and add a property for the html5smartimage widget in the dialog allowUpload="{Boolean}false"
which should stop the upload of local images to your dialog. Refer below screenshot.