StretchBlt and JPG

I am using StretchBlt to render to the screen.
These are jpgs converted by a libary from SmallerAnimals Software.

I am having problems with 256 gray images.

The white, 255, seems to be rendered as black, 0.
If I create a jpg with 254 background and black text it renders fine, if I make it 255 all I get is black.

This is only in the release version of the app and only if the stretch is great ie under 1/2 original or over 2x (and not an int multi). Ie debug with stretch always OK.
I know stretchBlt is not that good but I need to use it as I have no control of the varing size images I get sent. I have checked the brush alignment. Though I have not realised the pallete again.

Anyone got any code for
SetBrushOrgEx

as it applies to
SetStretchBltMode ??

I am wondering if any one else has used StretchBlt in a release version without problems?
To anyone using the other jpg 'converters' mentioned on these pages. Have you tried a StretchBlt in release?