What's the difference between SCI-FI and fantasy?
To me, SCI-FI means futuristic technology or something, and fantasy means magic and dragons. But Melanie Rawn, (thank you guys so much for recomending her. i love her books now!) who writes about dragons and magic, is under SCI-FI. I don't get it. Could someone explain the difference, please?

I think your definition is correct BlueFlames! It's just that book stores and internet sites aren't going to create a thousand different subsections for their books. They figure that people that are into Sci Fi will also be into Fantasy, and I think that in most cases (myself included), they are correct.

My local bookstore doesn't have a fantasy section. Everything is under SciFi!

Technically speaking, most of what we call science-fiction is science-fantasy. Science-fiction involved scientifically feasible things, whereas science-fantasy includes those things that cannot be created yet (lightsabers, warp engines, etc.)
When I worked in a bookstore, I split my books between sci-fi and fantasy. I don't like seeing everything lumped together.