hmmmm well im about to go to sleep since its like 3:30 am but lets see
1.) if it worked on a fresh copy, theres probably something in the screenpack conflicting with it, what screenpack do you use?
2.) a couple of things, what program do you use, I recomend the latest Z-CharCAD if your not already, for importing images into your .sff file. never the less, when you import pictures into .sff files they must be in .pcx format, and must be in the indexed color format, if you use photoshop you can change images from RGB to indexed in a flash. also with indexed color the last color in the color table is the one that will be transparent in the game.
I think you might not be changing the image to indexed color before uploading it to the .sff and if thats so then thats the reason its not showing up in the game.
3.) ok since you used dos2win on it, im going to ask you to get a fresh copy and then open the .def file in notepad, scroll down to "spr = stages\MS-Train.sff" and change that "\" to a "/" yes changing the slash key is probably what the problem is. i had a few stages that were giving .sff problems and it was because the wrong slash key wasnt allowing the game to read it.
I can help you better tommoro when im not falling asleep