Variable Transparency on IE control

[JohnnyThrash]

Below is a picture show what i have achieved so far.

i use a layered window to achieve the transparenct on the rounded corners of the menu. The menu itself is an html page loaded off of the hard drive into an IE object. The background hexadecimal color for my menu page is the same value as the color i have specified for my layered window's transparent color. This is how I've achieved the rounded edges.

This is very limiting, however. Let's say i want this menu to have a drop shadow or somewhat see-through in a certain area. Using my currect method I'm only allowed one non-opaque color. Ideally I'd like to incorporate transparent pngs into my menu to use with drop shadows and such.

I had developed this project earlier usuing HTMLayout. HTMLayout was easily able to handle the desired effect inherently, however the largest draw backs were that HTMLayout consumes much more memory around 30-40 megabytes of ram, while my current program is only taking up about 3-4 megabytes of ram and additionally HTMLayout does not support javascript.

For this reason I am using internet explorer instead.

Anybody have any ideas on how I could achieve my desired effect?