Where are they? I searched the graphic section with the terms transparent, and smilies, and nothing came up? I'm i going blind, or is it hidden? I know they exist.
Are they not transparent by default?
Nope, they have choppy white areas around them.
You can use these
http://www.emoticons.free.fr/
Edit: Scrap that they also got little white pixels around them. You could change the smileys extension to png in FileZilla. So rename smile.jpg to smile.png and the white should become transparent. The only con is that you will corrupt the file making it uneditable in Photoshop, Gimp, Paint, etc.