You definately didn't use alpha blend, that model has 'Add' applied to all of it. Which explains why the transparency is partial over all of it. Secondly it's showing up 'white' in the W3D viewer because your texture isn't named the same as the model is looking for.. thus within the viewer it replaces the missing texture with teh generic WS test texture (which si mainly white) Combined with 'Add' and your model looks almost pure white in the viewer. Ingame it's black since the game doesn't add the test texture...
I just saved the psd as a TGA called dekubabatexture.tga and it showed up fine in teh viewer.. besides being entirely transparent because of the wrong shader blend mode being used. The rest of the texture seems fine, so once you export it properly it should be fine.
[edit] I'm building a new website and just formatted and updated my w3d material guide. You can read it at
http://www.mercenarypixels.com/test/...es/materials1/ just keep in mind the site itself is under heavy construction so nothing works and there's nothign interesting to do there other than reading the formatted tutorials in the guides section.