WINAPI/DWMAPI Blur-behind window with irregular shape

Question

NB: THIS IS NOT A QUESTION ABOUT A BORDERLESS WINDOW.

So, I stumbled upon this program while I was exploring my Start menu the other day on Windows 7:

Answer 1

This is simply two borderless windows attempting to emulate the DWM. This is evidenced with the inconsistencies in the theme with shadows and the "fishy" close button and the break in the gradient of the right "subwindow." A simple query of the DWM would have given the proper hints to render the windows correctly.

There is no "sorcery involved," since both of the windows are perfectly square. The main window has a shape associated with it, causing the insert button to appear while the rest of the bottom appears translucent. The same effect could be achieved using either GDI+ or WPF.

I am purposing a clarification of how the original effect was created, and not a way to duplicate it. That has been successfully demonstrated by previous answers.