It does that, and more.

You are replacing the entire text of the control with a whole new group of  
text.  When this happens, the control has no way to know that the text is  
only different by a single character.  It acts as though it would when you  
replace the text of a control with any new text: it resets the selection  
and redraws the entire control.  The selection winds up back at the end  
because you explicitly put it there.

For what it's worth, the flashing is almost certainly mostly due to  
replacing the text, and not to the selection change.

Well, a couple of thoughts:

    1) I'm not really clear on why you need a "backspace algorithm".  The  
text box control handles the backspace key just fine.

    2) If what you are doing is mapping some other kind of input to the  
text box in a way that should emulate the user pushing the backspace even  
when they are not, one thing you can do is send the appropriate keys  
directly.  There are a variety of ways you can try to do this, none of  
them great IMHO.  The most popular is probably the SendKeys class, but as  
near as I can tell, there is no way to guarantee that your own application  
will actually get the keys, and it would require that the text box control  
has the current focus (which may or may not be true in your case).

If I really wanted to approach it this way, I would create a derived class  
from the text box class, and then provide specific methods to simulate the  
input you want, creating a Message instance that emulates the keyboard  
input you want to emulate, and calling the WndProc method for the control,  
passing that Message to it.  You'll probably have to simulate the  
WM_KEYDOWN and WM_KEYUP messages at a minimum; I'm not sure what else  
you'd have to do, but it could be a little tricky to get it just right (or  
it might not...like I said, I'm not sure :) )

    3) Probably the best way to handle it would be to do it the way that  
"commercial applications" most likely do it (I can't speak for any  
specific one, since you didn't mention which ones you're talking about).  
That is, they don't use the built-in edit controls, and they don't wind up  
having to redraw the entire control just because one character changed.  
It wouldn't be hard to create your own textbox control, and if you do so  
you can provide right in the control whatever mechanism you want for  
dealing with backspaces and other types of input not coming directly from  
the user's keyboard.  You would also be able to in that case make sure  
that only the part of the control that actually needed redrawing when some  
text was changed was actually redrawn.

Pete