Search for the code that makes items drop when you die and add this in the if statement.
if (charDie && mapID != JailMap)
{
dropitems();
}
not sure how familiar you are with C# but basically what that means is
"if your character dies and you are not on this map then drop items"
instead of just "if you die drop items"
I think the map id for jail is 6000 but i'm not positive.