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Stupid question...why not just create a transparent button in photoshop or fireworks?
Thank you for your kind and thoughtful answer.
BTW - I had already figured that part out. It was the importation and display that was the problem. I have since found a solution.
Great, what solution did you find, in case someone else runs into the same problem
As I said - I hadn't worked with Director for some time. In any event the solution was to save the graphic in png format which - when imported into Director - preserves the transparent BG.
After continuing to search this and other forums and then trying it out - it worked for my purposes.