How to make your own characters work during animation

Hello everyone, I am going to try and explain this as best as possible. I HAVE ATTACHED AN EXAMPLE FOR MY QUESTION.

I am trying to make it where the smiley face (see attachment) when gets hit by an object will end the game. BUT my problem is the white around the circle, I have made it transparent and it blends in with the game background, but when I drag the smiley onto the background in the box of the scene it does not outline the smiley as a circle but a box.

If someone can take the time to download this attachment and just drag it onto the black box scene you will see exactly what I mean.


If you checkout this video the guy pulls a submarine on the scene, and as you can see on the video only the submarine is being pulled out instead of a box surrounding it (like in my image).

Click on the ABGG: 09 Images video and you will see exactly what I am describing/asking.

Please if someone could help.



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