Index: subsystems/win32/win32k/ntuser/cursoricon.c
===================================================================
--- subsystems/win32/win32k/ntuser/cursoricon.c	(revision 40114)
+++ subsystems/win32/win32k/ntuser/cursoricon.c	(working copy)
@@ -1414,7 +1414,9 @@
    HGDIOBJ hOldOffBmp = 0;
    HBITMAP hbmOff = 0;
    HDC hdcMem = 0;
-   HGDIOBJ hOldMem;
+   HGDIOBJ hOldMem = NULL;
+   HDC hdcMem2 = 0;
+   HGDIOBJ hOldMem2 = NULL;
    BOOL bAlpha = FALSE;
 
    hbmMask = pIcon->IconInfo.hbmMask;
@@ -1452,7 +1454,8 @@
       PFN_DIB_GetPixel fnSource_GetPixel = NULL;
       INT x, y;
 
-      //Find alpha into icon
+      //In order to correctly display 32 bit icons Windows first scans the image,
+      //because information about transparency is not stored in any image's headers.
       psurfOff = SURFACE_LockSurface(hbmColor ? hbmColor : hbmMask);
       if (psurfOff)
       {
@@ -1549,61 +1552,59 @@
    else
        hdcOff = hDc;
 
-   hdcMem = NtGdiCreateCompatibleDC(hDc);
-   if (!hdcMem)
+   oldFg = IntGdiSetTextColor(hdcOff, RGB(0, 0, 0));
+   oldBg = IntGdiSetBkColor(hdcOff, RGB(255, 255, 255));
+
+   if (diFlags & DI_IMAGE)
    {
-      DPRINT1("NtGdiCreateCompatibleDC() failed!\n");
-      goto cleanup;
+      hdcMem2 = NtGdiCreateCompatibleDC(hDc);
+      if (!hdcMem2)
+      {
+         DPRINT1("NtGdiCreateCompatibleDC() failed!\n");
+         goto cleanup;
+      }
+      hOldMem2 = NtGdiSelectBitmap(hdcMem2, (hbmColor ? hbmColor : hbmMask));
    }
 
-   oldFg = IntGdiSetTextColor(hdcOff, RGB(0, 0, 0));
-   oldBg = IntGdiSetBkColor(hdcOff, RGB(255, 255, 255));
-
    if (diFlags & DI_MASK)
    {
+      hdcMem = NtGdiCreateCompatibleDC(hDc);
+      if (!hdcMem)
+      {
+         DPRINT1("NtGdiCreateCompatibleDC() failed!\n");
+         goto cleanup;
+      }
+
       hOldMem = NtGdiSelectBitmap(hdcMem, hbmMask);
       if (!hOldMem)
       {
          DPRINT("NtGdiSelectBitmap() failed!\n");
          goto cleanup;
       }
+   }
 
-      NtGdiStretchBlt(hdcOff,
+   if (hdcMem || hdcMem2)
+   {
+      IntNtGdiStretchBlt(hdcOff,
                    (DoFlickerFree || bAlpha ? 0 : xLeft),
                    (DoFlickerFree || bAlpha ? 0 : yTop), 
                    cxWidth,
                    cyHeight,
-                   hdcMem,
+                   hdcMem2 ? hdcMem2 : hdcMem,
                    0,
-                   0,
+                   (diFlags & DI_IMAGE && hbmColor ? 0 : IconSize.cy),
                    IconSize.cx,
                    IconSize.cy,
-                   ((diFlags & DI_IMAGE) ? SRCAND : SRCCOPY),
-                   0);
-
-      NtGdiSelectBitmap(hdcMem, hOldMem);
+                   SRCCOPY,
+                   0,
+                   hdcMem2 ? hdcMem : NULL);
    }
 
-   if(diFlags & DI_IMAGE)
-   {
-      hOldMem = NtGdiSelectBitmap(hdcMem, (hbmColor ? hbmColor : hbmMask));
+   if (hOldMem) NtGdiSelectBitmap(hdcMem, hOldMem);
+   if (hOldMem2) NtGdiSelectBitmap(hdcMem2, hOldMem2);
+   if (hdcMem2) NtGdiDeleteObjectApp(hdcMem2);
+   if (hdcMem) NtGdiDeleteObjectApp(hdcMem);
 
-      NtGdiStretchBlt(hdcOff, 
-                   (DoFlickerFree || bAlpha ? 0 : xLeft),
-                   (DoFlickerFree || bAlpha ? 0 : yTop),
-                   cxWidth,
-                   cyHeight,
-                   hdcMem,
-                   0,
-                   (hbmColor ? 0 : IconSize.cy),
-                   IconSize.cx,
-                   IconSize.cy,
-                   ((diFlags & DI_MASK) ? SRCINVERT : SRCCOPY),
-                   0);
-
-      NtGdiSelectBitmap(hdcMem, hOldMem);
-   }
-
     if (bAlpha)
     {
         BITMAP bm;
@@ -1687,7 +1688,6 @@
       if(hdcOff) NtGdiDeleteObjectApp(hdcOff);
    }
 
-   if(hdcMem) NtGdiDeleteObjectApp(hdcMem);
    return Ret;
 }