I am searching for a designer or an IDE which can be used to create XForms by dragging and dropping elements.
I found visual XForms designer by IBM at http://www.alphaworks.ibm.com/tech/vxd . But it is not that user friendly.
Thanks in advance.
There is Orbeon Form Builder. See also the FAQ. It's open source.
It's not strictly a general-purpose XForms editor, but it's a form editor that deals with XHTML+XForms+extensions. If you don't want to use Orbeon Forms to process the forms generated, you could transform the result e.g. with XSLT.
(Disclaimer: I work on Orbeon Forms.)