I've tried looking on UESP and must not be searching for the right thing. What I want to know is if I drop items in say Battlehorn castle will they vanish after the set amount of days? And if I were to go back before that time does that reset the timer so to speak?

You can be pretty sure your stuff will not vanish if you drop it on the floor. I believe there are one or two extremely rare exceptions to this, but I can't remember which interiors are the exceptions at the moment. Most of the containers in vanilla player homes (such as Battlehorn) do not respawn, and are safe to store things in.

My rule of thumb is: if in doubt, leave it on the floor. You can be pretty sure it will still be there later if it's on the floor.

When the cells reset, any and every object in that cell that is not marked persistent is removed from the game, so things such as actor corpses and the weapons/shields they may have dropped are subject. Essentially the game is clearing out all of the data it had generated from the leveled lists so it can refresh the generated content with updated data.

If, however, an item is marked persistent, such as all items dropped by the player or static objects, the game will leave them alone when it resets the cells.

So I can pretty much have a whole entire room filled with stuff I've dropped and it won't vanish? That's good. Now I can go through and start getting rid of stuff I don't want to display.

So that works the same way for things dropped outside do they also stay around or will they disappear? I know I've dropped a few things because I didn't want them in my inventory.

-Well, not exactly. If you drop too many items, the game will generate a loot bag in the center of the cell and move all the overflow into it to prevent crashes. This number is pretty high on the PC, so just be aware that there is a limit to the number of items you can drop into the cell before the game starts playing around with them. http://www.uesp.net/wiki/Oblivion:Glitches#Loot_Bags

-Yes, any item the player interacted with (besides turning it into a meteor via physics) will persist through cell resets. This can put strain on your savegames so if you need to download and install http://www.tesnexus.com/downloads/file.php?id=24606 to deal with those.

You don't want to be just dropping things around that you want to get rid of; especially outdoors because you might never find them again. It causes the savegame to bloat and swell, it can cause instability eventually.

Deposit unwanted items into corpses that you KNOW will respawn after 73 hours. Or better yet (in my opinion) settle on a favorite respawning container to get rid of "trash". I always use the container/crate in front of the "Shack for Sale" at the Imperial City Waterfront. I know it's reliable for getting rid of things. (see below): Just revisit the Waterfront 72+ hours after your last "trash deposit", and the allocated bytes for all those items "go away".

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BTW, I've done some interesting experiments on this general subject, may as well share the data. This is only certain for the PC version, though; and I have the UOP and UOP Supplimental installed.
I pieced together some things stated and implied on the UESP. Verified them thru careful experiments, and studied w/ a hex editor on my savegame.

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Neither Containers NOR Cells respawn on their own; they respawn when you revisit the cell at least 73 hours after you were LAST there. If you dump 243 Pewter Plates into the crate in front of the "Shack for Sale" at the Waterfront, those 243 Pewter Plates will "still be there", taking up file size and memory, until you go back to the Waterfront 73+ hours later. Then the crate will "regenerate" itself, and a few items of common clutter and maybe a few gold pieces will be put in it.

The same goes for any respawning containers, including dungeons. Also dungeon "contents" (NPCs, monsters, clutter IF it is flagged as persistant items... such as plates of food that ALWAYS show up in dungeons no matter how often you take it).

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If you kill the Unicorn at Harcane Grove, whether or not the Hircine Daedra quest is active, if you DO NOT take its horn, its body will be persistant. I assume that this is a safety measure, in case the Unicorn randomly dies; so that the Hircine quest will not become impossible if random critters kill it. A couple of times I've done Hircine's quest, and when I arrived at Harcane Grove, there were freekin Spriggans standing over its dead body, looking all smug and full of themselves. What were the Minotaur "Guardians" doing? Strolling around. Looking relaxed. Probably telling Minotaur jokes. Can't get good help these days.

If you DO take the horn, though, THEN the body disappears after 73+ hours; regardless of whether the Hircine quest is active or not.

The Unicorn never comes back (unless you resurrect it w/ the PC console).

Interesting stuff.

A couple of things to watch when dropping stuff for later.

A number of NPCs do have AI packages where they go steal things, so don't use places frequented by thieves.

Items you can drop can also be kicked into unreachable locations if there is traffic through the area. Known safe containers are always a better option than the floor.