DrawTransparentBitmap

// ==========================================================================
// Image Drawing Functions
// ==========================================================================
static HBITMAP StretchBitmap(HBITMAP hBitmap, int iWidth, int iHeight)
{
    HDC hdcScreen = ::GetDC(NULL);
    HDC hdcSource = ::CreateCompatibleDC(hdcScreen);
    HDC hdcStretch = ::CreateCompatibleDC(hdcScreen);
    ::SelectObject(hdcSource, hBitmap);
    HBITMAP hbmStretch = ::CreateCompatibleBitmap(hdcScreen, iWidth, iHeight);
    HBITMAP hOldBmp = (HBITMAP)::SelectObject(hdcStretch, hbmStretch);
    
    // Get the bitmaps size
    BITMAP bm;
    ::GetObject(hBitmap, sizeof(BITMAP), (LPSTR)&bm);

    // Stretch the bitmap
    ::SetStretchBltMode(hdcStretch, COLORONCOLOR);
    ::StretchBlt(hdcStretch, 0, 0, iWidth, iHeight,
        hdcSource, 0, 0, bm.bmWidth, bm.bmHeight, SRCCOPY);

    // Clean Up
    ::SelectObject(hdcStretch, hOldBmp);
    ::DeleteDC(hdcSource);    
    ::DeleteDC(hdcStretch);
    ::ReleaseDC(NULL, hdcScreen);

    return hbmStretch;
}

static void DrawTransparentBitmap(CDC* pDC, HBITMAP hBitmap,
    int x, int y, COLORREF clrTransparent)
{
    COLORREF crOldBack = pDC->SetBkColor(RGB(255,255,255));
    COLORREF crOldText = pDC->SetTextColor(RGB(0,0,0));
    CDC dcImage, dcTrans;

    // Create two memory dcs for the image and the mask
    dcImage.CreateCompatibleDC(pDC);
    dcTrans.CreateCompatibleDC(pDC);

    // Select the image into the appropriate dc
    HBITMAP hOldBitmap = (HBITMAP)dcImage.SelectObject(hBitmap);

    BITMAP bm;
    ::GetObject(hBitmap, sizeof(BITMAP), (LPSTR)&bm);

    // Create the mask bitmap
    CBitmap bitmapTrans;
    int iWidth = bm.bmWidth;//Width();
    int iHeight = bm.bmHeight;//Height();
    bitmapTrans.CreateBitmap(iWidth, iHeight, 1, 1, NULL);

    // Select the mask bitmap into the appropriate dc
    CBitmap* pOldBitmapTrans = dcTrans.SelectObject(&bitmapTrans);

    // Build mask based on transparent colour
    dcImage.SetBkColor(clrTransparent);
    dcTrans.BitBlt(0, 0, iWidth, iHeight, &dcImage, 0, 0, SRCCOPY);

    // Do the work
    pDC->BitBlt(x, y, iWidth, iHeight, &dcImage, 0, 0, SRCINVERT);
    pDC->BitBlt(x, y, iWidth, iHeight, &dcTrans, 0, 0, SRCAND);
    pDC->BitBlt(x, y, iWidth, iHeight, &dcImage, 0, 0, SRCINVERT);

    // Restore settings
//    dcImage.SelectObject(pOldBitmapImage);
    dcTrans.SelectObject(pOldBitmapTrans);
    pDC->SetBkColor(crOldBack);
    pDC->SetTextColor(crOldText);
}

/*
Drawing Transparent Bitmaps
Last reviewed: July 23, 1997
Article ID: Q79212
The information in this article applies to:
"    Microsoft Windows Software Development Kit (SDK) for Windows, versions 3.0 and 3.1
SUMMARY
A portion of a graphic image that does not change the contents of the screen is termed "transparent." The DrawIcon function can create an image that contains transparent portions. It is also possible to obtain this functionality using the BitBlt function; however, there are some additional steps involved.
The first step is to obtain the contents of the area where the bitmap will be drawn and to store this background image in a memory display context (DC). Mask out the area of the background that corresponds to the nontransparent portion of the image bitmap and mask out all transparent pixels from the image bitmap. Use the XOR raster operation to merge the image bitmap into the background bitmap. Finally, use the BitBlt function to move the merged image to the destination DC.
MORE INFORMATION
The following nine steps describe a process used to draw transparent bitmaps:
1.    Create a DC to hold the image bitmap.
2.    Select the image bitmap into the DC.
3.    Create a memory DC to hold the final image. This is the destination DC.
4.    Copy the portion of the screen that will be covered by the image into the destination DC.
5.    Create an "AND mask" that contains the mask of the colors to draw (the nontransparent portions of the image). To do this, perform the following three steps:
a. Set the background color of the image DC to the color that will
     be transparent in the image.
b. Create a monochrome DC.
c. BitBlt the image into the monochrome DC.
This will create an AND mask of the bitmap by setting pixels that match the background color to white (1), and setting all other pixels to black (0).
6.    Use BitBlt with the SRCAND raster operation code to copy the AND mask onto the destination DC.
7.    Use BitBlt with the SRCAND raster operation code to copy the inverse of the AND mask onto the image DC.
8.    Use BitBlt with the SRCPAINT raster operation code to copy the image DC onto the destination DC.
9.    Use BitBlt to copy the contents of the destination DC to the appropriate portion of the screen.
The following code is a function that demonstrates the above steps:
*/

static void DrawTransparentBitmap(HDC hdc, HBITMAP hBitmap,
    int iXStart, int iYStart, COLORREF clrTransparent)
{
BITMAP     bm;
COLORREF cColor;
HBITMAP    bmAndBack, bmAndObject, bmAndMem, bmSave;
HBITMAP    bmBackOld, bmObjectOld, bmMemOld, bmSaveOld;
HDC        hdcMem, hdcBack, hdcObject, hdcTemp, hdcSave;
POINT     ptSize;

hdcTemp = CreateCompatibleDC(hdc);
SelectObject(hdcTemp, hBitmap); // Select the bitmap

GetObject(hBitmap, sizeof(BITMAP), (LPSTR)&bm);
ptSize.x = bm.bmWidth;            // Get width of bitmap
ptSize.y = bm.bmHeight;         // Get height of bitmap
DPtoLP(hdcTemp, &ptSize, 1);     // Convert from device
                                     // to logical points

// Create some DCs to hold temporary data.
hdcBack = CreateCompatibleDC(hdc);
hdcObject = CreateCompatibleDC(hdc);
hdcMem    = CreateCompatibleDC(hdc);
hdcSave = CreateCompatibleDC(hdc);

// Create a bitmap for each DC. DCs are required for a number of
// GDI functions.

// Monochrome DC
bmAndBack = CreateBitmap(ptSize.x, ptSize.y, 1, 1, NULL);

// Monochrome DC
bmAndObject = CreateBitmap(ptSize.x, ptSize.y, 1, 1, NULL);

bmAndMem    = CreateCompatibleBitmap(hdc, ptSize.x, ptSize.y);
bmSave     = CreateCompatibleBitmap(hdc, ptSize.x, ptSize.y);

// Each DC must select a bitmap object to store pixel data.
bmBackOld = (HBITMAP)::SelectObject(hdcBack, bmAndBack);
bmObjectOld = (HBITMAP)::SelectObject(hdcObject, bmAndObject);
bmMemOld    = (HBITMAP)::SelectObject(hdcMem, bmAndMem);
bmSaveOld = (HBITMAP)::SelectObject(hdcSave, bmSave);

// Set proper mapping mode.
SetMapMode(hdcTemp, GetMapMode(hdc));

// Save the bitmap sent here, because it will be overwritten.
BitBlt(hdcSave, 0, 0, ptSize.x, ptSize.y, hdcTemp, 0, 0, SRCCOPY);

// Set the background color of the source DC to the color.
// contained in the parts of the bitmap that should be transparent
cColor = SetBkColor(hdcTemp, clrTransparent);

// Create the object mask for the bitmap by performing a BitBlt
// from the source bitmap to a monochrome bitmap.
BitBlt(hdcObject, 0, 0, ptSize.x, ptSize.y, hdcTemp, 0, 0, SRCCOPY);

// Set the background color of the source DC back to the original color.
SetBkColor(hdcTemp, cColor);

// Create the inverse of the object mask.
BitBlt(hdcBack, 0, 0, ptSize.x, ptSize.y, hdcObject, 0, 0, NOTSRCCOPY);

// Copy the background of the main DC to the destination.
BitBlt(hdcMem, 0, 0, ptSize.x, ptSize.y, hdc, iXStart, iYStart, SRCCOPY);

// Mask out the places where the bitmap will be placed.
BitBlt(hdcMem, 0, 0, ptSize.x, ptSize.y, hdcObject, 0, 0, SRCAND);

// Mask out the transparent colored pixels on the bitmap.
BitBlt(hdcTemp, 0, 0, ptSize.x, ptSize.y, hdcBack, 0, 0, SRCAND);

// XOR the bitmap with the background on the destination DC.
BitBlt(hdcMem, 0, 0, ptSize.x, ptSize.y, hdcTemp, 0, 0, SRCPAINT);

// Copy the destination to the screen.
BitBlt(hdc, iXStart, iYStart, ptSize.x, ptSize.y, hdcMem, 0, 0, SRCCOPY);

// Place the original bitmap back into the bitmap sent here.
BitBlt(hdcTemp, 0, 0, ptSize.x, ptSize.y, hdcSave, 0, 0, SRCCOPY);

// Delete the memory bitmaps.
DeleteObject(SelectObject(hdcBack, bmBackOld));
DeleteObject(SelectObject(hdcObject, bmObjectOld));
DeleteObject(SelectObject(hdcMem, bmMemOld));
DeleteObject(SelectObject(hdcSave, bmSaveOld));

// Delete the memory DCs.
DeleteDC(hdcMem);
DeleteDC(hdcBack);
DeleteDC(hdcObject);
DeleteDC(hdcSave);
DeleteDC(hdcTemp);
}