From elements not displaying properly

Alright, so I have a form that has a background image within a panel (Panel1) and a panel within that panel (Panel2). There a bunch of labels, textboxes, etc inside Panel 2 and when they are displayed they are all transparent and go through Panel2 and show the background image in Panel1. What is a way to fix this?

The start up form has the same background image and I'm loading it in the Activated subroutine as:

.. And then when I display the next form I use:

Here's a screenshot of what's happening..



I definitely don't want to release a piece of software like this. Any ideas?

Attached Images