I have discovered the Navajo problem to be something different. It is not a transparency issue, although the prop tips are part of the problem.
I am temporarily using a 7900 card, so its not urgent that I fix the problem. BUT coloured, sometimes one colour, sometimes multicoloured jig-saw puzzle type shapes populate the sky and the VC. Then if I Pause and restart the flight, or pull down a menu bar to adjust a setting the problem slowly goes away.
I assume it is some sort of texture breakout, but if anyone knows of a quick fix I will do so.