.png texture images with and without alpha masking: shadow problem

Hello All, I currently using vfsu 1.49.1. My alpha channel image textures seem to create strange effect on the objects they cast shadow on. Please have at look at the areas that highligh in the images below.
I tested my .png texture images with and without alpha masking using photoshop but both casuing the same strange effect. I did search through the forum but could not find the answer. Your help to solve this problem is much appreciated.
Thanks.

Re: .png texture images with and without alpha masking: shadow problem

Sorry, not sure why the image did not show up. here is the link,
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