Manual additions to texture buffer are masked out?

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I'm trying to overlay a 2-colour PNG image over a JPEG texture so that the mask is correct (JPEG messes it up, of course). However, the image drawn over the texture seems to have ALL its pixels set to the mask colour, or zero alpha if I use that instead (so invariably it just makes a rectangular "hole"). The same thing happens with the TextureBuffer demo, if I set the flags in the CreateTexture line to 2 or 4, the text disappears. Is this correct behaviour, or a problem with my card or Blitz or something? I have the latest Blitz3D update installed.