Hi! Well 2 questions here:
1. How to slowly make a sprite transparent,
2. How to have a transparent PNG file as a sprite? I tried but it lost it's transparency!
Thanks!

It looks like you might be using 1.4. Be sure to update to (if you don't have internet all the time) or launch (if you have Adobe Flash Player) version 2.0 to load transparent images. To slowly make an image transparent (you can do this in both versions) try this script piece:

clear graphic effects
repeat (50)
    change [ghost v] effect by (2)
end

@-Refresh- Thanks U SO much!!