Alpha Not showing up as transparent

Can anyone tell me what is wrong with the settings in this file, or maybe the .png that is packed inside it?
I can’t get the transparent parts to be transparent.

Thanks for looking.

Material transparency alpha is 1 along with specular. If you want to influence those with the texture, both need to be set as 0.

under transparency in the materials tab, drop the alpha value to 0 ( not the alpha in the textures tab, leave that at 1)

Thanks JA12 and Small Troll.