>This did not work as you expected it to in VS2008 either, so it's not a VS2010 issue. Basically I think what happens is that behind the scenes the BackColor of the label takes on the BackColor of its Parent ... it's not really Transparent. If the Parent.BackColor changes, the label.BackColor get changed to match it "behind the scenes". So, typically the label would retain the Form's BackColor. Once you changed the Parent of the Label to the PictureBox, then it correctly uses the image as its BackColor.
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>Unfortunately, the PictureBox is not a container control, so there's no drag-and-drop way to make it the Parent of the Label.You're stuck having to code it. However ... if you had used a Panel instead of a PictureBox, it would have worked with drag-and-dropping the label into the Panel. A Panel can have an image background.
Thank you