Ah, okay. I've tried saving it as PNG, and I've discovered that the transparency itself is working fine; however because the template was just copied/pasted from the internet, the white halo is from the layer itself.

Is there any way to remove this halo effectively, or will I have to manually go around it with the eraser tool, do you think? Also for future reference, is there anyway to download the template as transparent, so I won't have to do this every time? ;o

Ohh, okay. I feel like an idiot now, haha. :'3 I'd just been clicking the link to the template images and copy/ pasting them as opposed to right clicking and saving the file first. Derp.

That's worked perfectly, thank you so much for the help!

Submitted one of these designs the other day, got a message that the evolutions were too similar, added/subtracted more, resubmitted and got the same message. I added quite a bit to the design for the second submitting and don't really understand why it was rejected again... Anyway I could get a more specific idea on what evolutions were too close?

Mind showing us the stages? Helping might be a lot easier then.

First Stage:http://i267.photobucket.com/albums/ii293/Saber12994/Knufffel.png
Second Stage:http://i267.photobucket.com/albums/ii293/Saber12994/Knufffel2.png
Third Stage:http://i267.photobucket.com/albums/ii293/Saber12994/Knufffel3.png
Fourth Stage:http://i267.photobucket.com/albums/ii293/Saber12994/Knufffelforgotstage.png
Final Stage:http://i267.photobucket.com/albums/ii293/Saber12994/Knufffel4.png

First to second: Only two small changes. You need atleast 3 major changes.
For what I suggest, make the top evolve a tad more, same goes for the pants. I also would try actually to let the pony tail OFF. and add it at the second.
Second to third: The scales are already one big improvenment. Also the ears seem to be easy to spot. I suggest for this stage, I should make the top a tad darker. Colors can be quite a difference too.
Third to fourth: Change the top more, the horns are alright. Make SOMETHING happen to the bottom. Give her bracelets or such at her feet.
Fourth to Final: Give her TINY wings in the fourth one so it makes sense where they come from. I mean, I don't even know where they suddenly came from. Sure, the final may be a blast but it can also be a bit logical. Next to that, the fourth and final should be updated with the changes you make in the previous ones but I hope that was already logical.

I also suggest trying to clear the colors that fall out of the lines. Its another reason to reject because it isn't clean.

I hope I might be of some help.

Alright, thank you both for the suggestions, I will work on it a bit more and try to get things straightened out. :)