Unfortunately, I haven't been able to figure out how LRR determines which colours are supposed to be transparent. The closest thing I've been able to do is create transparent particle effects which works by treating pure black (000,000,000) as fully transparent, pure white (255,255,255) as fully opaque, and everything else inbetween partially transparent. Then, in the Surface Editor in Lightwave Modeler, you have to go to the Advanced tab and set Additive Transparency to 100%.   That won't work for what you're trying to do. There's probably a variable in the LWO files that tells the game which color should be transparent. I'm going to guess it just looks at the index number in the texture. I can help you test this if you want. Too bad you're getting my help anyways.   I'm choosing the Slimy Slug's eye for this example. Please open your textbooks to Data/Creatures/Slug/A014_SlugEye.BMP   I know the transparent colour for the slug's eye is 14 from previous research. Let's mess with it a bit and see if the game looks at the index or at just the color. Here I moved index 14 to 240 just to get it out of the way. 14 is now some shade of orange.     Now I moved 0 (which is white) to 14 and changed the green background to white to see if I could force that to be transparent.     It worked! Great. Let's look at the model, which is Slug_Eye.lwo in the same folder. We'll open it with a hex editor (I use XVI32) and look for instances of 14.   Oddly enough, the only instance I found was in the filename: A014_SlugEye.BMP This is really interesting. There are other textures that start with A###, but most of them start with A000. I think that this specifies the alpha index. To test, I looked at a few other textures, like A068_LightX and A227_headtop2, and guess what? The index in the file name always matches the index of the background colour. I can further test this by making some new models and textures and seeing if this hypothesis holds up, but that will have to be later.