First off, don't do it like that.
Instead, create a GraphicsPath at class level, and add a line to it in the MouseMove handler.
GraphicsPath myPath = new GraphicsPath();
...
myPath.AddLine(oldPoint, newPoint);
oldPoint = newPoint;
...
Invalidate your PictureBox, and handle the Paint event
In the Paint event, create a Region from the path and fill it:
Region myRegion = new Region(myPath);
e.Graphics.FillRegion(Brushes.Red, myRegion);
You then do not damage the picture in your PictureBox, and can use the Region to reference only those parts of the image the user has marked.