How can I add a watermark with an alpha channel?

Use a PNG with alpha-channel as Logo source.
If your logo source is PNG with alpha-channel, set logo_mode equal to 1, to keep transparency.

Note: the logo_transparent tag is only for usage with the vp6_flix output via XML.

Example XML:

<logo>
  <logo_source>[LogoURL]</logo_source>
  <logo_x>[LogoLeft]</logo_x>
  <logo_y>[LogoTop]</logo_y>
  <logo_mode>1</logo_mode>
  <logo_threshold>[LogoTreshold]</logo_threshold>
  <logo_transparent>[LogoTransparent]</logo_transparent>
</logo>