I am looking for ideas for a program that I am trying to build. I need to have two pictures, one blurred and one clear. The blurred picture will cover the clear picture so it appears blurred. I need the mouse to appear as a sight glass so when the user moves the mouse over the blurred picture the clear version will appear in the sight glass. I am a college student trying to build this for a class. Any ideas? I have some knowledge of visual basic and html.

Would be rather simple in HTML, but since you posted this in C/C++ I assume you want to get an idea in those languages. Check the code snippet "Mouse-over (rollover) effect in a Windows GUI program" at:
You have to change the cursor in WinMain() and put the images on the label. It will take all the power of your brain to make this work!

A basic idea would be

1) Blit the blurred picture
2) Define a rectangle around the mouse co-ords (clipped to the blurred pic too!)
3) Blit the clear portion in the rectangle

Win32 GDI should be an easy way to go on this one! (Look up the mouse messages, WM_PAINT message and the BitBlt function)