Are you using a .bmp image with translucency enabled? - I've seen that exact behavior when I've experimented with those settings (as recently as last week, actually).

If you want to use translucency, you'll need to use a .tga image with alpha-channel transparency (or import a .png with alpha-channel trans using SkinStudio & let SkinStudio do the conversion to .tga automatically*). If you're not using any transparency in the image, you can also change Transparency and Translucency to "opaque". If you are using magic pink transparency in a .bmp image, enable Transparency (in Transparency & Translucency) and disable Translucency in the Translucency switch.

Once you have the images & settings the way you want them, save the skin, then go to Explorer & delete from the skin's folder all the .wb4 files and any temporary files that have a tilde (~) in the file name. Then reload the skin. This often solves problems with getting transparency to display properly.

*Right-click on the image name in the Attribute (right) pane of SKS & you'll see a menu item "Import >"; click that and choose "Browse for file". Navigate to the .png & select it, accept the default in the next dialog assuming all image states are included in the .png, and SKS will convert it to .tga format for use in the skin.