That's odd, here's one of the PNGs I use, indeed, the one from above, so it definitely should work imported as an Alpha into SP. (I wonder, if importing as texture vs alpha makes a difference? ..Answer, yes. If I import as a texture, I can use it as a stencil, but not as an alpha. If I import it as an Alpha, I can use it as either. Dunno if that helps). :-)