Hi Tim,
Here's a Xara Xtreme file for you to look at...
Rounded rectangle with slices defined at the corners. Seems to work ok vis a vis transparency. I did it a little differently than you did, however.
When I tried to work with your file, the transparency worked correctly as well. Perhaps it's because I'm using the Nov 23 version of Xara Xtreme?
Merry
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