Problem with masking texture. Help please!!

Can anyone tell me why when I composite this texture on to of texture 0 on my mesh, it doesn't mask out the black in the image like it's supposed to. If I load an image instead of create one, it works fine!

MapSelTex = CreateTexture(512,512,4)
TextureBlend MapSelTex,1
EntityTexture MapMesh,MapSelTex,0,1

Hold on, I think I may have found it...

Nope, still not working right, but I think I found a work around.