JPhillips,
Lookout only accepts BMP or WMF, formats that unfortunately don't allow transparency. Although, there's a way to do what you want.
You must use a BMP filled with a flat color in the area you want to make transparent(use any image editor,ex. photo paint, paint, etc.). Then rigth-click over the panel and choose "INSERT GRAPHICS". Select your BMP and select the pixel which color you want to make transparent.(Enter X and Y coordinates in the Transparent pixel fields, and the corresponding color becomes transparent. The top-left corner of the bitmap is X=0, Y=0; the center is X=-1, Y=-1; the bottom-right corner is X=-2, Y=-2. To get the result you want, try entering a value for X, then a value for Y, then click in the X field to see how the bitmap is affected.)
regards
JSS