Title of the post pretty much says it all! For some reason there’s a gray area around the area that I’d like transparent. It goes away when I select the object but with nothing selected, it appears.
Any idea what’s going on here?
Screenshot:
For transparent textures its usually best to enable Premultiply in the Texture / Image panel
I tried premultiply, still no luck. It just seems to make it darker.
When I render it with Blender’s internal, parts of it turn out white too. Not quite sure what’s going on, it’s just a bit of paint on a transparent background.
If you use same texture as alpha and bump in BI there will be some parts where they shouldn’t. Higher rez texture gives better result for me.

That’s one plane, one image.