Draw bitmap with grayed 3D effect

I have tried the DrawState function before writing one of my own. However, what I have got disappointed me because I found that often, some colors are badly converted from the original image and disapear into the result. I have attached to this message a sample bitmap which shows very well the difference between DrawState() and DitherBlt() when they are used on the same bitmap. It's true that the difference is not always so visible. In fact, it depends on the original bitmap. More it has pale colors or adjacent pixels with near color, more ugly the result is with DrawState(). DitherBlt() has not this problem and the result looks always perfect. In addition, it works under Win32s. I agree that in most cases, DrawState() is good enough. But if your application must run on Windows 3.1 and/or you have bitmaps with a lot of pale colors to draw, its better using DitherBlt(). I tested it under NT3.51, NT4.0 and Windows95.
//
//      DitherBlt :     Draw a bitmap dithered (3D grayed effect like disabled buttons in toolbars) into a destination DC
//      Author :        Jean-Edouard Lachand-Robert (iamwired@geocities.com), June 1997.
//
//      hdcDest :       destination DC
//      nXDest :        x coordinate of the upper left corner of the destination rectangle into the DC
//      nYDest :        y coordinate of the upper left corner of the destination rectangle into the DC
//      nWidth :        width of the destination rectangle into the DC
//      nHeight :       height of the destination rectangle into the DC
//      hbm :           the bitmap to draw (as a part or as a whole)
//      nXSrc :         x coordinates of the upper left corner of the source rectangle into the bitmap
//      nYSrc :         y coordinates of the upper left corner of the source rectangle into the bitmap
//
void DitherBlt (HDC hdcDest, int nXDest, int nYDest, int nWidth, 
				int nHeight, HBITMAP hbm, int nXSrc, int nYSrc)
{
	ASSERT(hdcDest && hbm);
	ASSERT(nWidth > 0 && nHeight > 0);
	
	// Create a generic DC for all BitBlts
	HDC hDC = CreateCompatibleDC(hdcDest);
	ASSERT(hDC);
	
	if (hDC)
	{
		// Create a DC for the monochrome DIB section
		HDC bwDC = CreateCompatibleDC(hDC);
		ASSERT(bwDC);
		
		if (bwDC)
		{
			// Create the monochrome DIB section with a black and white palette
			struct {
				BITMAPINFOHEADER bmiHeader; 
				RGBQUAD 		 bmiColors[2]; 
			} RGBBWBITMAPINFO = {
				
				{		// a BITMAPINFOHEADER
					sizeof(BITMAPINFOHEADER),	// biSize 
						nWidth, 				// biWidth; 
						nHeight,				// biHeight; 
						1,						// biPlanes; 
						1,						// biBitCount 
						BI_RGB, 				// biCompression; 
						0,						// biSizeImage; 
						0,						// biXPelsPerMeter; 
						0,						// biYPelsPerMeter; 
						0,						// biClrUsed; 
						0						// biClrImportant; 
				},
				
				{
					{ 0x00, 0x00, 0x00, 0x00 }, { 0xFF, 0xFF, 0xFF, 0x00 }
					} 
			};
			VOID *pbitsBW;
			HBITMAP hbmBW = CreateDIBSection(bwDC,
				(LPBITMAPINFO)&RGBBWBITMAPINFO, DIB_RGB_COLORS, &pbitsBW, NULL, 0);
			ASSERT(hbmBW);
			
			if (hbmBW)
			{
				// Attach the monochrome DIB section and the bitmap to the DCs
				SelectObject(bwDC, hbmBW);
				SelectObject(hDC, hbm);
				
				// BitBlt the bitmap into the monochrome DIB section
				BitBlt(bwDC, 0, 0, nWidth, nHeight, hDC, nXSrc, nYSrc, SRCCOPY);
				
				// Paint the destination rectangle in gray
				FillRect(hdcDest, CRect(nXDest, nYDest, nXDest + nWidth, nYDest +
					nHeight), GetSysColorBrush(COLOR_3DFACE));
				
				// BitBlt the black bits in the monochrome bitmap into COLOR_3DHILIGHT bits in the destination DC
				// The magic ROP comes from the Charles Petzold's book
				HBRUSH hb = CreateSolidBrush(GetSysColor(COLOR_3DHILIGHT));
				HBRUSH oldBrush = (HBRUSH)SelectObject(hdcDest, hb);
				BitBlt(hdcDest, nXDest + 1, nYDest + 1, nWidth, nHeight, bwDC, 0, 0, 0xB8074A);
				
				// BitBlt the black bits in the monochrome bitmap into COLOR_3DSHADOW bits in the destination DC
				hb = CreateSolidBrush(GetSysColor(COLOR_3DSHADOW));
				DeleteObject(SelectObject(hdcDest, hb));
				BitBlt(hdcDest, nXDest, nYDest, nWidth, nHeight, bwDC, 0, 0, 0xB8074A);
				DeleteObject(SelectObject(hdcDest, oldBrush));
			}
			
			VERIFY(DeleteDC(bwDC));
		}
		
		VERIFY(DeleteDC(hDC));
	}
}