OnPaint in child window paints over parent?

As far as I know painting in child window in OnPaint using the DC
obtained from CPaintDC dc(this); should be limited to the child
window area. In my case it does not when the same code is compiled for
PC, but does seem to work on a WindowsCE device.

Specifically:
Code for PC and WinCE is the same. Child window is created in an MFC
extension dll. Handle to parent window is passed to dll from main
executable and child window is created as follows:

CTestWindow* p= new CTestWindow;
int size=120;
int w=size*2;

if( p->CreateEx(0,_T("STATIC"), _T("TEST"), WS_BORDER|WS_CHILD,
w-size, 0, size, size, hWnd, NULL ,NULL)) //hWnd is the parent window
handle passed from main executable
{
.......
}
else
    delete p;

.......

CTestWindow paints itself by following code:

OnPaint()
{
    CPaintDC dc(this);
    CRect rect;
    GetClientRect(rect);
    dc.FillSolidRect(&rect, 0xFFFFFF);

    int x,y;
    HICON hTestIcon;
    do{
        ... some code that sets x, y, and hTestIcon

    DrawIconEx(dc.m_hDC,x,y,hTestIcon,0,0,0,NULL, DI_NORMAL);
    }while(some test);
}

On WindowsCE device icons are truncated at window boundary and do not
show up if they fall outside. On a PC they are drawn beyond the child
window boundary.

Any ideas what can cause this behaviour?
Thanks,
Henryk Birecki