Create Transparent surface on top of a primary surface using DirectDraw7

can anybody explain me how to create a transparent surface on top of a primary surface using directdraw7 in c++? I am able to create primary surface and blit on it. but when i try to create transparent surface using overlay, the CreateSurface() function call is failing. I have set DDSCAPS_OVERLAY flags for DDSURFACEDESC2 structure. any help would be greatly appreciated. I searched a lot in internet but couldn't get much help.