From the blog "Introduction to Modding with NIND"
This tutorial goes over how to add transparency to a mesh in an existing .NIF file.
Tools Needed:
BodySlide and Outfit Studio (v)
GIMP - GNU Image Manipulation Program*
GIMP DDS Plugin
NifSkope setup for use with your textures
*There is also a DDS plugin for Photoshop
Methods:
There are currently two methods I know of for applying transparency to armors ingame:
Mesh Segment-based:
Easy and straightforward