Ah, yea, I've tried it out, my bad ^^
First impressions:
The AI's pretty nice, guess it's very fine for a shoot 'em up! The game also looks pretty versatile at first glance.
On my computer (Athlon XP 1500+ @ ~2075MHz, Club3D Radeon 9700, 512MB RAM @ 333MHz) it ran awfully slowly (around 15fps or so). It slows down when it needs to display a few laser projectiles of the player (and I also didn't see any lasers on the other ships) so I think it dies bcuz of the stretch/rotating code to display the many laser pictures.
Some controls don't work on a keyboard setting other than yours, you should capture keys from the onkeydown and onkeyup instead of the onkeypress, that way you assign to a key instead of a generated character. (KeyCode map on MSDN)
Anyway, if you wish to develop a well playable game, I really, really recommend to use DirectX or OpenGL, bcuz without those, you simply won't be able to display nice enough looking graphics on even a high grade computer. GDI is just too slow

(And that's experience from FS2D ^^) Of course you can probably optimize the engine much here there and everywhere, but that's not just it.