Hi everyone,

.png or .tiff alpha channels are not being recognized by lights, which is resulting in square halos on my renders.

Ambiant occlusion doesn't recognize my alpha channels, and yes, the shadows have a faint halo. So there is transparency, but it's as if the image is on a clear film and the film is visible.

On this project we are going for a hand-drawn style, so there's loads of linework and illustrations that are being ruined by alpha issues.

Transparency is working, but AO and Shadows aren't. (oddly, when i use mental ray 'sun and sky' generator the render looks clean, so there has to be a way?)

Any ideas would be greatly appreciated.