Hi All
It would seem that transparency in the image in this case should be ignored.
Although the png already has transparency as shown by the top image and the desired "ghost" effect is there by simply using it as an overlay.
The problem MummyPazuzu had was adding a Scale effect to make it smaller or any movement effect like Position. The already existing transparency being apparently lost as soon as Scale is selected even before any values are entered or sliders moved.
In fact this doesn't matter..It's just an an unwanted effect that is a bit misleading (in this case.)
The order of adding the effcts is not important either. A Transparency effect can be added following Scale or Scale can applied before Transparency.
Position may seem to alter the transparency but this can be corrected in the effects window by simply adjusting the Opacity slider and monitoring the effect in the Sequence Preview window.
It's confusing and probably shouldn't happen. Initially I found it puzzling and assumed a bug until I looked at it a bit more closely
Nat