VSE - A strip with a PNG/transp won't show as long as there's another one above it As the screenshots show, each strip has a PNG image with transparency. 
blueoutline.png is above yellowball.png, each is using Alpha Over as a method of blending.
What am I missing?
Is this the reason: "Blender won't handle an alpha channel in a codec. Alpha in a codec is largely a nonstandard practice" Source.
You want to select both strips and add a alpha over effect strip.