The color that Mugen considers to be transparent is the one in the first color slot of the palette (if you're using Paint Shop Pro's .pal format) or last color slot (if you're using PhotoShop's act format)... or was it the other way around, I forgot. Anyway you can put the color you want in this slot, the area associated to that color slot will be transparent in Mugen.
or to u mean like this shunpohadoken making their background so they look clear like this example = the one the left call mizure has no background there for her portrait is trasparent
