Here's how to get VEGAS to use a still image's alpha channel:
- Make sure the image is saved in TIFF or PSD format. If you're using PSD, flatten the image first.
- Load the image into the VEGAS timeline.
- Right-click the event in the timeline and select "Properties".
- Open the "Media" tab and select "Premultiplied" from the "Alpha Channel" dropdown menu.
- Then, select a background color if you want.