I am trying to make an object that includes some invisible parts, but the parts that need to be transparent show up opaque. My issue is similar to this: http://modthesims.info/t/485104
I have seen similar posts but none of them help me because I am using Blender+S3PE instead of TSRW.
I also tried changing the shader to SimHair but it made the whole object invisible.

SimHair can lead to some unexpected results indeed, so I'd try Phong or Phong alpha in this case

Another thing I usually do is clone an object that already has transparency. If your object is a Decor piece, I'd go with either the sculpture version of the cowplant or a regular plant

Also, your diffuse map has an alpha channel right? And you saved it as a DDS file (DXT5) Right? All those things can break the alpha map as well

Yes, I have saved it as DXT5 with interpolated alpha and replaced with the original img.

I am trying to make a distant terrain so idk how can I do it from cloning a different type of object.

I actually don't know much about chunk entries and shader types. I've found two shaders in MODL - one in the chunk 2 and the other in chunk 6. In the original file, first is set to "Phong" and the other one is to "None".
With the original object's shader settings it ignores alpha like this:

After changing the first shader to Phong Alpha it looks like this:

As you can see, the buildings look like they are behind the whole island. And somehow, some stuff like blotches or weird shadings appear on the texture. Idk what might be causing it cuz it's a very simple mesh with simple texture, no such details anywhere.

Idk if I should change the other shader as well which is set to "None", or maybe the shaders in MLOD (it's first shader is set to "Shadow Map" if that matters).
(Btw, please don't mind how crude it looks, it's still a WIP )

I think you could try setting the object shader to 'Foliage', or I think there's also a AlphaThreshold in Phong you could try bumping up (to 100 or more).

Thanks a lot! I set both the shader to Foliage and Alpha Threshold to 100 and it looks fine now!
If I saw ur reply a day ago, I wouldn't even be able to locate the Alpha Threshold; but luckily I just learned about Mtnf which it's included in