This problem plagued me for

This problem plagued me for years.  Here's the solution:

Open the Setup menu,

Select Video and Audio Preferences

Uncheck "Enable Hardware Acceleration"

Click ok

Close and reopen Studio

Thankso FANDOS.SP on youtube for this fix.

@jimcvideo,

You are correct that if you want a professional looking video, you'll just stick with the simple fade.  However, we make a lot of slideshow videos for children and use lots of different and wild transitions.  The kids love it!
 

To each his own.