The program makes a new Bitmap and copies the foreground image into it. It then calls the Bitmap's MakeTransparent method to make the Bitmap's red pixels transparent.

Next the program creates a Bitmap to hold the result. It copies the background image into it, copies the foreground image on top, and then displays the result.

' Overlay the non-red parts of the foreground image on top
' of the background image.
Private Sub btnOverlay_Click(ByVal sender As System.Object, _
    ByVal e As System.EventArgs) Handles btnOverlay.Click
    ' Copy the foreground image into a bitmap.
    Dim fg_wid As Integer = picForeground.Image.Width
    Dim fg_hgt = picForeground.Image.Height
    Dim fg_bm As New Bitmap(fg_wid, fg_hgt)
    Using gr As Graphics = Graphics.FromImage(fg_bm)
        gr.DrawImage(picForeground.Image, 0, 0, fg_wid, _
            fg_hgt)
    End Using

    ' Make the red pixels transparent.
    fg_bm.MakeTransparent(Color.Red)

    ' Make the result bitmap.
    Dim bg_wid As Integer = picBackground.Image.Width
    Dim bg_hgt = picBackground.Image.Height
    Dim bg_bm As New Bitmap(bg_wid, bg_hgt)
    Dim cx As Integer = (bg_wid - fg_wid) \ 2
    Dim cy As Integer = (bg_hgt - fg_hgt) \ 2
    Using gr As Graphics = Graphics.FromImage(bg_bm)
        gr.DrawImage(picBackground.Image, 0, 0, bg_wid, _
            bg_hgt)

        ' Draw the foreground image on top.
        gr.DrawImage(fg_bm, cx, cy, fg_wid, fg_hgt)
    End Using

    ' Display the result.
    picResult.Image = bg_bm

    ' We don't need the foreground bitmap any more.
    fg_bm.Dispose()
End Sub