Blender Render - Transparent Material Not Working

I was making an earth in Blender when I ran upon a glitch/problem: the atmosphere is not transparent when rendered. I’ve been using blender for a few years now, albeit not very often, but this time its serious. When I try Rendering the scene, here’s what I get:


And yeah… It doesn’t help that every single tutorial out there shows that I have to do EXACTLY what I already did. So, please help me!!!

What are we supposed to be seeing ?
What exactly is wrong
What material / texture settings
What textures ?
Where is your blend file that contains all necessary textures packed

Please supply some useful info.