Try this
private void Form1_Load(object sender, EventArgs e)
{
// Transparent background...
pictureBoxOverlay.BackColor = Color.Transparent;
// Change parent for overlay PictureBox...
pictureBoxOverlay.Parent = pictureBoxMain;
// Change overlay PictureBox position in new parent...
// pictureBoxOverlay.Location = new Point(0, 0);
}
Result

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