This was a tutorial I had created for another website some time ago. I thought its quite useful. The people who helped were tonypa, voidskipper and kazama_bee from Mochiforums.

I've used two symbols, 1 empty movieclip named blip and 1 movieclip called circle (which has the circle)

the code is like this

Explaination

stop();
t = 0;
//Creating variables

_root.attachMovie("blip", "blip", _root.getNextHighestDepth(), {_x:1500, _y:200});
_root.createEmptyMovieClip("container_movie", _root.getNextHighestDepth());
//attaching the movieclips

blip.onEnterFrame = function() {
//this is the function that executes every frame

if (Math.random()*1000<100 and t<50) {
//This condition adds another circle after a certain random interval till total circles are 50

circle = container_movie.attachMovie("circle", "circle"+t, container_movie.getNextHighestDepth(), {_width:a, _height:b, _x:(20+Math.random()*300), _y:(20+Math.random()*300), _rotation:Math.random()*300});
t++
circle.xspeed = Math.random()*9;
circle.yspeed = Math.random()*9;
//Creating the circle with random x and y speeds.

circle.onEnterFrame = function() {
this._x -= this.xspeed;
this._y -= this.yspeed;
//Motion of the circles

if (this._x<10) {
this._x=10;
this.xspeed = -this.xspeed;
}
if (this._x>590) {
this._x=590;
this.xspeed = -this.xspeed;
}
if (this._y<10) {
this._y=10;
this.yspeed = -this.yspeed;
}
if (this._y>390) {
this._y=390;
this.yspeed = -this.yspeed;
}
//Making sure the circle won't go out of the boundaries.

};
}
//From here I start checking for collisions of the circles
for (i=0; i
a = _root.container_movie["circle"+i];
for (j=i+1; j
b = _root.container_movie["circle"+j];
var dx = b._x-a._x;
var dy = b._y-a._y;
var dist = Math.sqrt(dx*dx+dy*dy);
//Checking the distances between two circles.
if (dist<20) {
_root.solveBalls(a, b);
//The circles I've taken are of radius 10, so if distance <20 then they collide, so I call a function.
} else {
}
}
}
};

//This function is provided by kazama_bee at mochi forums. I'll try my best to explain it
function solveBalls(ballA, ballB) {
var x1 = ballA._x;
var y1 = ballA._y;
var dx = ballB._x-x1;
var dy = ballB._y-y1;
var dist = Math.sqrt(dx*dx+dy*dy);
radius = 10;
//it calculates the distance, i could have passed it to the function but it works this way

normalX = dx/dist;
normalY = dy/dist;
midpointX = (x1+ballB._x)/2;
midpointY = (y1+ballB._y)/2;
//Now this calculates the normal and mid points..

ballA._x = midpointX-normalX*radius;
ballA._y = midpointY-normalY*radius;
ballB._x = midpointX+normalX*radius;
ballB._y = midpointY+normalY*radius;
//shifts the two circle two a different location so they don't hit each other

dVector = (ballA.xspeed-ballB.xspeed)*normalX+(ballA.yspeed-ballB.yspeed)*normalY;
dvx = dVector*normalX;
dvy = dVector*normalY;
//This calculates the new speeds for the circles

ballA.xspeed -= dvx;
ballA.yspeed -= dvy;
ballB.xspeed += dvx;
ballB.yspeed += dvy;
//assigns the new values
}

And the end result looks like this.