Ok, I know what's happening. If you go to Settings Manager >> Window Manager Tweaks >> Accessibility tab, there is a setting for "Key used to grab and move windows". If its set to ALT, then the zoom feature will override the transparency feature. You need to change ALT to another key for grabbing the window, then the transparency/opacity will work. The zoom feature will also then work with the new key that you specified (along with regular window-grabbing functions).
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