Quote: "Try painting the bits where the alpha channels are black on the texture."
I know how to make an alpha.
Quote: "If you want an example, get an overlay (blood is good) and put a light next to it, then change your preferences to Full Light Mapping (if it isn't already) then look at the shadow cast by the overlay. Apply the same principle to your mesh with the texture."
No idea what your saying here, your talking about shadows from the blood decal?
I think you have the wrong idea from what Im saying, I want transparency in a tex on a segment, not a 1 bit alpha, transparency, or a mask with graduated mask, not 1 bit, as in colour zero is mask. this is what your adding to ?