You could try handling WM_CTLCOLORSTATIC. From the docs, "If a dialog box procedure handles this message, it should cast the desired return value to a INT_PTR and return the value directly. If the dialog box procedure returns FALSE, then default message handling is performed." So it seems like the "default message handling" is what is screwing it up: try overriding it by returning a brush that is the background color of the dialog, and also set the background mode of the HDC to transparent. So something like
case WM_CTLCOLORSTATIC: HDC hdc = (HDC) wparam; SetBkMode(hdc, TRANSPARENT); return (INT_PTR) CreateSolidBrush(GetSysColor(COLOR_WINDOW));
I'm pretty sure you're supposed to let Win32 own the brush after this i.e. don't delete it, but make sure.
