Ok so your a skinner, you make a skin with transparency and you've added a shadow to your frames and such. Now you want to add the blurring feature to your skin but you get something like this...

hum... now we have a problem cause that looks like hell.
But take notice, the image is square but the blur is effecting only SOME of the whole image area for that part of the frame. So whats happening here? This didn't just hit me till last night even though I've been dealing with it personally ever since the blur feature was added. After some discussion with another Master (Lasse, aka PixelPirate) skinner it dawned on us and here are some 'test' results for my working theory on this 'discovery'.
The Theory
The blur effect has a threshold point. At some point in the opacity of the image the blur feature no longer effects the image being used.
The Tests
I'm going to test this as I write this post so bare with me. For the test I'll make a white wallpaper with a 2 pixel stroke on it, make a 100 pixel long frame section gradiented with a 100% to 0% opacity set with a blur and at true size. This should give a 1% opacity change per line of pixels on the frame and we'll see where the blur stops taking effect. Here goes...

ok here is test 1... first is our 'control' (the plain stroke, no frame) then blue, red, green, black and last white. As you can see pure black has no blur effect at all. This isn't exactly what I expected. Lets try different shades of grey because it seems white does have an effect where black doesn't. there must be some point at which this changes.
Test 2... I'm not going to post the pics of this but oddly enough black up to 3,3,3 does not blur and anything lighter does. The odd part is the white gradient (used as the inactive part) also did not blur at the same time. Need to run some different tests...
Test 3... Here I made something like a frame and added a pure black gradiented outer glow in frame 1. This blurred the frame but not the outer glow. In frame 2 I added a dark blue shadow to the outer glow as you can see where the dark blue shadow appears so does the blur. Additionally even though the inactive frame did NOT have the dark blue shadow it also blurred the same area. In frame 3 I changed the dark blue shadow to pure black and again the blur effect did nothing to it. See the image below.

My Conclusion (updated Aug. 2nd '08)
Window Frames - You must use pure black (or RGB 3,3,3 and lower) for the shadows to not blur. Blur will effect anything with color. Image for the frame must have a clear line of pixels on the outter rim for the widnow frame. Blurr effect is square, it does nto support odd shapes, you can use the settings under the 'Extras' tab to round off the corners.
Taskbar - untested
Start Menu - Not fully tested. Blur effect looks odd when 2 transparent parts are touching in XP, Vista is uneffected by this.
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Now you might ask why I went through this trouble and why the big write up. As a skinner and an advocate to 'pushing limits' and finding out what those limits are these sort of things help both me and all you other skinners. Currently there is no 'Mask Layer' for the blur effect but this might be one way to (in some fashion) create one to an extent.
My conclusion is based solely on the above testing plus comments and further testing below. Please if you find some variation or the like, feel free to post your results here for others to see and read.
Thanks and happy skinning as always 