I’m using image textures with transparency. I’ve set the material alpha to 0, using Z-transparency and enabled the Use Alpha in the texture options. I use this for non rectangular images and adjust the alpha texture influence to make objects fade in and out.
It works but where the alpha is zero, you can still see a faded image as the corners show in the attached screen shot. It’s never completely transparent.
I also tried PNG rendering set to RGBA and the Shading->Alpha set to tranparent. And unlocked the Sky option in Scene->Layer. But this just changed it to a milky translucent white.
I hate to use compositing. Seems like there should be a simple solution to this.
One thing you have not enabled which you should when using transparency is the Receive Transparent Shadow option for the objects that will have a shadows cast on them the transparent planes