add and delete circle/rectangle on an image

Here is my Code... i tried something like this... on delete button(button2), drawing the rectangle in black color. I know its not correct, but just trying something.please help. its very urgent.
please frds... help me.

using System;
using System.Collections.Generic;
using System.ComponentModel;
using System.Data;
using System.Drawing;
using System.Linq;
using System.Text;
using System.Windows.Forms;
namespace addRect
{
public partial class Form1 : Form
{
Image newImage = null;
bool btn1 = false;
bool btn2 = false;
Rectangle rect1;
public Form1()
{
InitializeComponent();
}
private void Form1_Load(object sender, EventArgs e)
{
newImage = Image.FromFile("C:\\Documents and Settings\\ing12675\\Desktop\\images\\ectopic-ruptured-1a.jpg");
pictureBox1.Image = newImage;
}
private void pictureBox1_MouseClick(object sender, MouseEventArgs e)
{
//int x = e.X;
//int y = e.Y;
if (btn1)
{
using (Graphics g = Graphics.FromImage(pictureBox1.Image))
{
rect1 = new Rectangle(e.X, e.Y, 20, 20);
g.DrawRectangle(Pens.Red, rect1);
btn1 = false;
}
}
else if (btn2)
{
using (Graphics g = Graphics.FromImage(pictureBox1.Image))
{
if (rect1.Contains(new Point(e.X, e.Y)))
{
g.DrawRectangle(Pens.Black, rect1);
btn2 = false;
}
}
}
pictureBox1.Invalidate();
}
private void button1_Click(object sender, EventArgs e)
{
btn1 = true;
pictureBox1.MouseClick += new MouseEventHandler(pictureBox1_MouseClick);
}
private void button2_Click(object sender, EventArgs e)
{
btn2 = true;
pictureBox1.MouseClick += new MouseEventHandler(pictureBox1_MouseClick);
}
private void button3_Click(object sender, EventArgs e)
{
pictureBox1.Image.Save(@"D:\\test.jpg");
}

}
}