Ok first of you did not put in BitBlt, that is what puts the Image on the screen for you, everything else just gets it ready.

I maked all the changes I think

Code:
// Pictures in Static Boxes
// By Steve Mack 
// March 6, 2001 (06.03.01)

#include <windows.h>
#include "resource.h"

HWND	ghWnd_Main; // this is the main window 
HWND	ghWnd_ExitButton;
HWND	ghWnd_label;
HWND	ghWnd_Hello;

HDC		hdc;   //File that will hold the bitmap in memory

HBITMAP	hBitmap; //This will hold the Bitmap so we can load it into the DC 


	
LRESULT CALLBACK WndProc(HWND hWnd, UINT uMsg, WPARAM wParam, LPARAM lParam) 
{
	switch(uMsg) 
	{
		case WM_CLOSE:
			DeleteDC(hdc);				//<----------------Change
			DeleteObject(hBitmap);		//<----------------Change
			DestroyWindow(ghWnd_Main); // Destroy the main window
			return 0;

		case WM_DESTROY:
			DeleteDC(hdc);			//<----------------Change
			DeleteObject(hBitmap);	//<----------------Change
			PostQuitMessage(0); // Quit the application
			return 0;

		case WM_COMMAND:
			if(LOWORD(wParam) == BN_CLICKED && (HWND)lParam == ghWnd_ExitButton) 
			{
				PostQuitMessage(0);
			}
			//<----------------Changed To Be Used For BitBlt
			if(LOWORD(wParam) == BN_CLICKED && (HWND)lParam == ghWnd_Hello) 
			{
				HDC hdc_label;
				hdc_label = GetDC(ghWnd_label);
				BitBlt(hdc_label, 0, 0, 200, 50, hdc, 0, 0, SRCCOPY);
			}
			return 0;
	}

	return DefWindowProc(hWnd, uMsg, wParam, lParam); // Not handled - let the system deal with it
}




int WINAPI WinMain(HINSTANCE hInstance, HINSTANCE hPrevInstance, LPSTR lpCmdLine, int nCmdShow) 
{
	WNDCLASSEX wcxMyClass;

	hdc = CreateCompatibleDC(NULL);   //Creates a space in memory
	//HBITMAP hBitmap;   //<------------Delete

	//If you have the bitmap loaded as a resource
	hBitmap = (HBITMAP)SelectObject(hdc, LoadBitmap(hInstance, MAKEINTRESOURCE(IDB_BITMAP1)));
	
	//What we did is load the bitmap from the resource editor to the VAR hBitmap, then move it to the DC using SelectObject.
	
	//Little error checking
	if ((!hdc) || (!hBitmap)) 
	{
		MessageBox(NULL,"ERROR","ERROR",NULL);
	}


	wcxMyClass.cbSize = sizeof(WNDCLASSEX); // Size of structure in bytes
	wcxMyClass.style = 0; // Extra style information
	wcxMyClass.lpfnWndProc = WndProc; // Pointer to window procedure
	wcxMyClass.cbClsExtra = 0; // Extra bytes in class definition
	wcxMyClass.cbWndExtra = 0; // Extra bytes for each window
	wcxMyClass.hInstance = hInstance; // Instance handle for the class
	wcxMyClass.hIcon = NULL; // Default icon - use system
	wcxMyClass.hCursor = LoadCursor(NULL, IDC_ARROW); // Load the system arrow
	wcxMyClass.hbrBackground = (HBRUSH)(COLOR_BTNFACE + 1); // Background brush
	wcxMyClass.lpszMenuName = NULL; // Menu name [MAKEINTRESOURCE(IDM_MAINMENU)] - none here
	wcxMyClass.lpszClassName = "TESTCLASS"; // Class name
	wcxMyClass.hIconSm = NULL; // Small icon
	
	RegisterClassEx(&wcxMyClass); // Register the class

	ghWnd_Main = CreateWindow("TESTCLASS", "Steve's Program!", \
		                      WS_OVERLAPPEDWINDOW, 100, 100, 300, 300, \
							  NULL, NULL, hInstance, NULL);
	if(ghWnd_Main) 
	{
		ghWnd_ExitButton = CreateWindow("Button", "E&xit", WS_CHILD | WS_VISIBLE, 100, 200, 100, 30, ghWnd_Main, NULL, hInstance, NULL);
		
		//<----------Made Bigger
		ghWnd_label = CreateWindowEx(WS_EX_NOPARENTNOTIFY, "Static", NULL, WS_CHILD | SS_REALSIZEIMAGE, 50, 10, 200, 50, ghWnd_Main, NULL, hInstance, NULL);

		//<----------Added To Be Used For A Test
		ghWnd_Hello = CreateWindow("Button", "BitBlt", WS_CHILD | WS_VISIBLE, 100, 230, 100, 30, ghWnd_Main, NULL, hInstance, NULL);


		ShowWindow(ghWnd_Main, nCmdShow); // Show using the specific show style
		ShowWindow(ghWnd_label, nCmdShow); //<----------Added
	}

	/////////////////////////
	// Handle message loop //
	/////////////////////////
	MSG msg;
	while(GetMessage(&msg, NULL, 0, 0)) {
		TranslateMessage(&msg); // Translate keycode messages
		DispatchMessage(&msg); // Send to the window
	}

	UnregisterClass("TESTCLASS", hInstance); // Unregister our window class
	return msg.wParam; // msg.wParam contains the code passed to PostQuitMessage()
}