UpdateLayeredWindow works on Windows 11 : I had uploaded a test in WinUI 3/C# : https://github.com/castorix/WinUI3_SwapChainPanel_Layered
and people told me it worked on Windows 11 but that I needed to add DwmSetWindowAttribute for borders/shadow
Or you can also test this sample I had posted in C++, which could have borders because I did not use DwmSetWindowAttribute :
[Edit] I just saw this thread was from you : so this sample, with the same jpg and white transparent color, is not transparent on Windows 11 ?