BUG
** This issue is addressed in ArcGIS 9.0 Service Pack 2 (SP2) **OutputLib facility for displaying PNG images handles alpha transparency incorrectly.If the BasicRasterPicture co-class is used for loading a PNG image that has an alpha channel transparency, the image will be incorrectly loaded with black transparency, irrespective of selecting a specific transparent color.
Article ID:000007429
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