But do you actually enable transparency blending by setting the proper flags/ Flashvars when embedding the SWF in the page? By default, all such stuff is treated as opaque and just drag&dropping it in the browser would not necessarily give a correct rendiution of the final result. Only opening the associated HTML would/ should do that. If that's not the problem, I would assume that due to some update either in Flash player or the FLV encoding compoinents something has changed and you may just sift through the options and re-enable something. The clip being green would indicate that the transparency is actually there, it's just not being used/ displayed....
Thanks for your quick response but I'm actually pulling the SWF file into a PowerPoint using a program called Articulate (which is a program that kind of imbeds itself within PPT). The SWF files I have done previously all worked correctly in PPT but now they are not. There might have been an update between yesterday and today...although I wouldn't know the first thing about what options mean what.
In case anybody has a similar issue in the future this is how I solved it...I updated my computer's Flash Player! That's it, the process works completely fine now. Can't believe the solution was so simple.