It sounds like your trying to put an LED on top of a button. If so, that probably won't work at all, as you've discovered. The only way to get 100% consistent operation is to make the LED look like the button (two state LED) and use the transparent image as the actual button, on top of it.
I've found that any time I've tried to layer bitmaps, it doesn't work as expected, or even the same way every time. And when I've used "send bitmaps to back", I've ended up starting over, as the order seems to never be right again.
I use Screen4, though. Every time I try to use Machscreen, I run into problems. Since I'm more familiar with Screen4 and it's peculiarities, I just find it easier.
Good luck.