This little test project displays a testpanel (orange) and a testentity ("dummy.bmp"). Sweet. This should convince you that the settings of the entity are not at fault.
Now, if you hit space, we get to the interesting part.
Here, draw_obj is used (as long as the spacebar is pressed) to draw two panels and two entities, in theory. The manual explicitly states:
The SHOW flag of the object needs not be set.
So I reset the SHOW-flag.
As you can see, two panels are correctly rendered. Neat!
However, as you can also see, the entity is not shown.
For the curious, setting the entities' SHOW-flag won't help with draw_obj - it still won't be rendered (though you will see the entity at the last set position, obviously, but that's not due to draw_obj).