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I tried to set the handle as parent using SetParent()(win32).The response is success but the c# form got embedded to the parent c++ application window.
Yeah, SetParent is going to move the form to the container control you're setting it to. That's what SetParent does.
It seems you're trying to do something different from that, like setting your window as the OWNER of the C# form, perhaps? Owner and Parent are two different concepts.