The problem is due to a combination of using imagecopyresampled(), and saving out to a gif afterwards. Gif files are pallette based, and can only have 1 transparency channel. When you copy an image with imagecopyresampled() it’ll wipe out the current transparency channel and replace it with an alpha channel of per pixel transparency information. If you saved a PNG file it’d work ok (obviously you’d need the usual htc hack to get PNG transparency working in IE6), but as you’re saving as a gif you’re losing the transparency. Normally you’d convert back to a color pallette using imagetruecolortopallette() but that throws up a couple of issues – first, it’s a crap function that does a really bad job of choosing colours, and second, as you’ve used imagecopyresampled() you’re not going to have a single colour you can set as transparent any more.

The solution is to use imagecreate() in the first place to make an 8bit image canvas to copy to, and to use imagecopyresized() to copy the data. It will end up being nasty and blocky, but that’s the price you pay for using gifs.