HELP! Nested Comps and Alpha Problem

I'm having a problem when I add a nested comp as a layer into my active comp. The problem is I lose the alpha channel. I've played with the "Collapse Transformation" switch on both the nested comp layer as well as the layers in the nested comp (hope that makes sense). I forgot what combination worked but it did but only until I added an effect to the nested comp layer. Then the layer became a solid alpha again.

If this makes sense to anyone out there and they have an answer I would greatly appreciate it. My head is about to explode.

I'm using AE CS4 on a mac snow leopard.