Hello,
The problem is that the workspace is injected to be the same size as the injection div given, and the toolbox is also inside that div. So I am actually not sure how feasible it is to prevent the blocks from appearing in that space, but you are welcome to experiment and try.
But the simplest solution is to just change the appearance of the toolbox so I just want to double check on that solution - do you ever plan to have something else "behind" the toolbox? If not, then what is the visual difference between having a white toolbox and a transparent one? A white one would look identical to your current screenshot except the blocks would not appear on top of it.
Maribeth