Bloggermods

Properly displaying images with transparency + remove border:

Go to <Template> <Customize> choose <Advanced> <Images> and
set both Background color and Border color to transparent.

To remove the shadow that you're left with you'll need to edit your template HTML:

Go to <Template> <Edit HTML> check <Expand Widget Templates>

Find code:

 background: $(image.background.color);
  border: 1px solid $(image.border.color);

  -moz-box-shadow: 1px 1px 5px rgba(0, 0, 0, .1);
  -webkit-box-shadow: 1px 1px 5px rgba(0, 0, 0, .1);
  box-shadow: 1px 1px 5px rgba(0, 0, 0, .1);

and replace with:

 background: $(image.background.color);
  border: 1px solid $(image.border.color);
/*
  -moz-box-shadow: 1px 1px 5px rgba(0, 0, 0, .1);
  -webkit-box-shadow: 1px 1px 5px rgba(0, 0, 0, .1);
  box-shadow: 1px 1px 5px rgba(0, 0, 0, .1);
*/