the problem is somewhere else mate,
if you are in OpenGL mode it has some limitation with transparency, the transparency virtually does not work it is defined on true/false basis so if there is anything considered as transparent the transparency will be always 100% and vice versa. Settings to setup the 'treshold' for this see snapshot 1.
if you are in the Internal Engine mode set the transparency in shading on, see snapshot 2.
::rk