Does your mane code look like this? Just going from jpg to png won't fix it.
material preset_#_maneMat
{
technique
{
pass
{
cull_hardware none
cull_software none
alpha_rejection greater_equal 128
texture_unit
{
texture preset_#mane.png
}
}
}
}
Also, make sure there is actually transparency in the mane file. It should look like this (just a random example from one of my presets):
(http://i57BannedImageSite/25hza6f.jpg)
There shouldn't be anything in the transparent part of the mane, or otherwise it will be blocky.
Hope this helps!
I hope this helps you out dearie c: