I'm not exactly sure what you are on about, but you should read this article:

http://www.efg2.com/Lab/Graphics/CursorOverlay.htm

Purpose
The purpose of this project is to show how to convert a cursor to a bitmap and overlay its bitmap on another bitmap.
The article and program were originally made to work on win98. i hope it helps

edit: also see the program notes:

Hardware Requirements
True color (24 or 32-bit) display. Fails on many high color (16 bit) displays.
so check out if you are running in 16 bit color depth!