From my experimenting, it seems that only the blue component of your background parameter affects the background. Changing it to 0x000000FF yields a bright blue, and values in between (like 0x0000007F) produce dark blues. The alpha, red and green channels seem to be ignored and taken as 0.
I don't know whether it's a problem with your image or a bug with GDI+, but I found some links for you of other people having the same problem:
[1] and
[2].