Recently we developed plug-in (with really poetic name graphicalinstaller.dll :) which allows to make certain parts of form fully transparent. Here is example of such installer:

Wildstar Installer

Woooow! You ask: What magic is hidden behind this?

There is no magic at all!
Al you need to do is to create a Mask. Mask is simple image file - bitmap (.bmp) with two colors (minimum!).
Mask for transparent parts

There is no need to have black and white bitmap - any two colors can be used. The rest is made in plug-in:

// Set form style to None
WizardForm.BorderStyle := bsNone;
hWnd := StrToInt(ExpandConstant('{wizardhwnd}'));
// Extract background mask
MakeFormTransparentFunction(hWnd, ExpandConstant('{tmp}\mask.bmp'));

The plug-in simply takes the mask file and handle to form, gets Transparency color from upper-left corner (coordinates 0:0) and set all pixels of form that have the same color (from mask) to transparent. Really easy.

There is no fading - transparency is strictly true / false! You can provide any 16 colors, 256 color or even 24bit color picture as mask - but as Transparency color is taken from pixel [0:0] so you may achieve bad looking results.

You can download whole example here (958 kB).

The transparency works on all OS versions (Win XP, Vista, 7, 8, ...) with Unicode version of Graphical Installer for Inno Setup.

As this plug-in is written in Delphi it cannot be used for GI for NSIS - but we are working on this so await it soon :)

Update 2016-03-30:
- Fixed download links
- This feature now also works in GI for NSIS (see the official example)