That makes sense. "None" would preserve the transparency. I don't remember the layout, but I suspect that it was taking information from either over the edge of the document (which on some programs equals black), or there was bleed over from the neighboring tiles.
The only problem with "none" is that it can make things look pixelated, since it's adding in the exact same color blocks instead of guessing at in-betweens, but the original art is a touch on the blurry side, so it's probably fine. I'm glad you got it working!