I've tried that and it loses its opacity. I've put up a couple of screen shots to show what is happening. The top one is what I'm trying to achieve with the grey box showing the red squares through it (screenshot taken from photoshop). The bottom image is after saving the image as a gif and putting it into IE. (It loses its opacity and becomes solid grey :-(

screenshot

I can get the image to be transperant or solid but not halfway in between.