As far as I remember the default setting is for whichever colour is in the top-left pixel of the sprite. You should double check that the character's hair or anything else isn't occupying that sprite, then double-check that it the transparency is set to the top-left option.
Other options include other corners, palette 0 and no transparency from memory - I'd like to be more specific but I'm on a computer that does not have AGS right now.
Other options include other corners, palette 0 and no transparency from memory - I'd like to be more specific but I'm on a computer that does not have AGS right now.