In Adjustments and Effects dialog (Tools > Effects and Filters) in Video Effects > Overlay tab it says:
"Transparency", "none" and "full".
But when the slider is set to "none" the image is transparent, and when set to "full" it is not transparent.
So maybe reverse the values of the slider.
Maybe even remove "none" and "full", it seems none of the other sliders in the dialog tells the user which side gives a higher value.
Using Windows 7 + VLC 2.2.1.