Also try checking return values of window functions.

// INCLUDES ///////////////////////////////////////////////
#define WIN32_LEAN_AND_MEAN

#include (windows.h)
#include (windowsx.h)
#include (stdio.h)
#include (math.h)
#include (ddraw.h)
#include "resource.h"

char bname[]="imagerc.bmp";
HBITMAP hbitmap;
static BITMAP bm;
HDC hdc;
HDC hmdc;
HWND hwnd;

int ginit(void *parms=NULL);
int gshutdown(void *parms=NULL);
int gmain(void *parms=NULL);
// DEFINES ////////////////////////////////////////////////

// defines for windows
#define WINDOW_CLASS_NAME "WINCLASS1"
#define KEY_DOWN(vk_code) ((GetAsyncKeyState(vk_code) & 0x8000) ? 1 : 0)
#define KEY_UP(vk_code) ((GetAsyncKeyState(vk_code) & 0x8000) ? 0 : 1)
#define swidth 640
#define sheight 480
#define bpp 16

// GLOBALS ////////////////////////////////////////////////
HWND main_window_handle = NULL; // save the window handle
LPDIRECTDRAW lpdd;
// FUNCTIONS //////////////////////////////////////////////
LRESULT CALLBACK WindowProc(HWND hwnd,
UINT msg,
WPARAM wparam,
LPARAM lparam)
{
// this is the main message handler of the system
PAINTSTRUCT ps; // used in WM_PAINT
HDC hdc; // handle to a device context

// what is the message
switch(msg)
{
case WM_CREATE:
{
// do initialization stuff here
return(0);
} break;

case WM_PAINT:
{
// simply validate the window
hdc = BeginPaint(hwnd,&ps);
EndPaint(hwnd,&ps);
return(0);
} break;

case WM_DESTROY:
{
// kill the application
PostQuitMessage(0);
return(0);
} break;

default:break;

} // end switch

// process any messages that we didn't take care of
return (DefWindowProc(hwnd, msg, wparam, lparam));

} // end WinProc

// WINMAIN ////////////////////////////////////////////////
int WINAPI WinMain( HINSTANCE hinstance,
HINSTANCE hprevinstance,
LPSTR lpcmdline,
int ncmdshow)
{

WNDCLASS winclass; // this will hold the class we create
HWND hwnd; // generic window handle
MSG msg; // generic message
hbitmap=LoadBitmap(hinstance,bname);

// first fill in the window class stucture
winclass.style = CS_DBLCLKS | CS_OWNDC |
CS_HREDRAW | CS_VREDRAW;
winclass.lpfnWndProc = WindowProc;
winclass.cbClsExtra = 0;
winclass.cbWndExtra = 0;
winclass.hInstance = hinstance;
winclass.hIcon = LoadIcon(NULL, IDI_APPLICATION);
winclass.hCursor = LoadCursor(NULL, IDC_ARROW);
winclass.hbrBackground = GetStockObject(WHITE_BRUSH);
winclass.lpszMenuName = NULL;
winclass.lpszClassName = WINDOW_CLASS_NAME;

// register the window class
if (!RegisterClass(&winclass))
return(0);

// create the window
if (!(hwnd = CreateWindow(WINDOW_CLASS_NAME, // class
"Hello", // title
WS_OVERLAPPEDWINDOW | WS_VISIBLE,
0,0, // x,y
640,480, // width, height
NULL, // handle to parent
NULL, // handle to menu
hinstance,// instance
NULL))) // creation parms
return(0);

// save the window handle in a global
main_window_handle = hwnd;
ginit();
// enter main event loop
while(1)
{
if (PeekMessage(&msg,NULL,0,0,PM_REMOVE))
{
// test if this is a quit
if (msg.message == WM_QUIT)
break;

// translate any accelerator keys
TranslateMessage(&msg);

// send the message to the window proc
DispatchMessage(&msg);
} // end if
gmain();
// main game processing goes here

} // end while
gshutdown();
// return to Windows like this
return(msg.wParam);
}

int ginit(void *parms)
{
// this function is where you do all the initialization
// for your game

// create object and test for error
if (DirectDrawCreate(NULL,&lpdd,NULL)!=DD_OK)
return(0);

// set cooperation level to windowed mode normal
if ((lpdd->SetCooperativeLevel(main_window_handle,
DDSCL_ALLOWMODEX | DDSCL_FULLSCREEN |
DDSCL_EXCLUSIVE | DDSCL_ALLOWREBOOT))!=DD_OK)
return(0);

// set the display mode
if ((lpdd->SetDisplayMode(swidth,sheight,bpp))!=DD_OK)
return(0);

// return success
return(1);
} // end Game_Init

///////////////////////////////////////////////////////////

int gshutdown(void *parms)
{
// this function is where you shutdown your game and
// release all resources that you allocated

// release the directdraw object
if (lpdd!=NULL)
lpdd->Release();
DeleteDC(hmdc);
DeleteObject(hbitmap);
// return success
return(1);
} // end Game_Shutdown

///////////////////////////////////////////////////////////

int gmain(void *parms)
{

hdc=GetDC(hwnd);
hmdc=CreateCompatibleDC(hdc);
SelectObject(hmdc,hbitmap);
GetObject(hbitmap,sizeof(bm),(LPSTR) &bm);
BitBlt(hdc,0,0,bm.bmWidth,bm.bmHeight,hmdc,0,0,SRCCOPY);

if (KEY_DOWN(VK_ESCAPE) | | KEY_DOWN(VK_SPACE))
PostMessage(main_window_handle, WM_DESTROY,0,0);

ReleaseDC(hwnd,hdc);
// return success
return(1);
} // end Game_Main

///////////////////////////////////////////////////////////