The second video was rendered from a animation program (Blender) with an alpha channel, so it shouldn't have a background. However, no matter what blending mode I use, the contents of the video become semi transparent, instead of just the background. What am I doing wrong?
When I import the second video with the alpha channel background, I've been selecting straight-unmatted for the unlabeled alpha channel popup. I set the blending mode to screen as I usually do with muzzle flashes, lens flares and other videos that have alpha channels, but when I do this the rest of the video becomes nearly 100% transparent. What am I doing wrong?
It sounds like you're not using blending modes, but setting track mattes instead.
How would I properly set blending modes then? I right click on the footage, select blending mode, and pick one of the options. Or at least thats what I have been doing.
If you really are using a blending mode (Add, Multiply, Screen, Overlay, etc.) and NOT mistakenly using the Track Matte selections (Alpha Matte, Alpha Inverse Matte, Luma Matte, etc.) you may have problems with the alpha channels. You may have thought you were making an alpha channel, but selected a video codec that doesn't supprt alpha channels like mp4, H.264, or some sort of Windows media thing.
You can check by just making a comp, setting the background to the checkerboard pattern indicating transparency, and adding the footage. The look of the background shouldn't change in the parts of the footage that should be transparent.
When creating work that must contain alpha channels, I always go with Quicktime Movies using the Animation or PNG codecs. They're lossless, to boot. If you're new at this, you have to get used to their large file sizes. The terms "supports alpha channels" and "small file size" are mutually exclusive.
How would I use the image sequence with AE? Are you supposed to run the image sequence through something and render it out as a video? Seems like that would remove the alpha channel.
Oh, you can use image sequences instead of movies if you want, but again, you have double-check that you're actually creating transparency. I don't think you are. You can check the same way as you'd check for movies as described above.
JPEG Image sequences don't allow transparency. My favorite kind of image sequence, the PNG image sequence, does when you go 32 instead of 24 bits deep.