Index: windows/window.c
===================================================================
--- windows/window.c	(revision 8136)
+++ windows/window.c	(working copy)
@@ -75,6 +75,19 @@
 #define WHEEL_DELTA 120
 #endif
 
+/* hacky, hacky hacky for transparency without windows sdk full install */
+#ifndef WS_EX_LAYERED
+#define WS_EX_LAYERED           0x00080000
+#define LWA_COLORKEY            0x00000001
+#define LWA_ALPHA               0x00000002
+/* Preparation for the function we want to import from USER32.DLL */
+typedef BOOL (WINAPI *lpfnSetLayeredWindowAttributes)(HWND hWnd, 
+                                  COLORREF crKey, BYTE bAlpha, DWORD dwFlags);
+
+lpfnSetLayeredWindowAttributes m_pSetLayeredWindowAttributes;
+#endif // ndef WS_EX_LAYERED
+static BYTE bAlpha = 240;
+
 static Mouse_Button translate_button(Mouse_Button button);
 static LRESULT CALLBACK WndProc(HWND, UINT, WPARAM, LPARAM);
 static int TranslateKey(UINT message, WPARAM wParam, LPARAM lParam,
@@ -640,7 +653,9 @@
 
     {
 	int winmode = WS_OVERLAPPEDWINDOW | WS_VSCROLL;
-	int exwinmode = 0;
+	int exwinmode = WS_EX_LAYERED;
+	HMODULE huser32 = GetModuleHandle("USER32.DLL");
+
 	if (!cfg.scrollbar)
 	    winmode &= ~(WS_VSCROLL);
 	if (cfg.resize_action == RESIZE_DISABLED)
@@ -653,6 +668,17 @@
 			      winmode, CW_USEDEFAULT, CW_USEDEFAULT,
 			      guess_width, guess_height,
 			      NULL, NULL, inst, NULL);
+
+	/* import SetLayeredWindowAttributes from USER32.DLL */
+	m_pSetLayeredWindowAttributes =
+		(lpfnSetLayeredWindowAttributes)
+		GetProcAddress(huser32, "SetLayeredWindowAttributes");
+
+	if (m_pSetLayeredWindowAttributes != NULL) {
+		m_pSetLayeredWindowAttributes(hwnd, 0,
+			bAlpha, LWA_ALPHA);
+	}
+
     }
 
     /*
@@ -3048,10 +3074,22 @@
 			       TO_CHR_Y(Y_POS(lParam)), shift_pressed,
 			       control_pressed, is_alt_pressed());
 		} else {
+		    if (b == MBT_WHEEL_UP && bAlpha > 2) {
+			bAlpha -= 2;
+		    }
+		    if (b != MBT_WHEEL_UP && bAlpha < 253) {
+			bAlpha += 2;
+		    }
+		    
+		    if (m_pSetLayeredWindowAttributes != NULL) {
+			m_pSetLayeredWindowAttributes(hwnd, 0,
+				bAlpha, LWA_ALPHA);
+		    } else {
 		    /* trigger a scroll */
 		    term_scroll(term, 0,
 				b == MBT_WHEEL_UP ?
 				-term->rows / 2 : term->rows / 2);
+		    }
 		}
 	    }
 	    return 0;
Index: mkfiles.pl
===================================================================
--- mkfiles.pl	(revision 8136)
+++ mkfiles.pl	(working copy)
@@ -475,7 +475,7 @@
     "# C compilation flags\n".
     "CFLAGS = -D_WINDOWS -DWINVER=0x0500\n".
     "# Resource compilation flags\n".
-    "RCFLAGS = -DNO_WINRESRC_H -DWIN32 -D_WIN32 -DWINVER=0x0401\n".
+    "RCFLAGS = -DNO_WINRESRC_H -DWIN32 -D_WIN32 -DWINVER=0x0500\n".
     "\n".
     "# Get include directory for resource compiler\n".
     "!if !\$d(BCB)\n".