Problem with transparent textures on my stage

[Pegasus]

Hi guys. I'm working on a stage which is going to have some fire shimmering in front of it in certain areas. But I am having great difficulty making the fire texture behave how I want it to. It is showing up in front of things it shouldn't, and behind things it shouldn't. Look at these pictures:

Sorry but you are not allowed to view spoiler contents.

I have tried messing with the depth settings under Z mode, but to no avail. Setting "EnableDepthUpdate" to true makes the flames display with proper depth, but makes them lose their transparency (characters and special effects like fire cannot be seen behind them).