select the image.
click on Window->Transparency
It should be in the same box as the stroke & gradient transport, you'll see a the transparency tab, which clicking on the menu part above will gain it focus. There will be a drop-down menu that currently should say "Normal." Try a bunch of the different formulas, like Screen, Lighten. You'll find one that should work.
If not, $30 and I'll re-create it into a vector file.
Hope this helps
