After letting Windows 7 to automatically upgrade my system, I found that the taskbar was no longer transparent. So I ran the trouble shooting features to find out why the transparency feature was gone.
Desktop -> Right Click -> Personalize -> Window Color
The transparency feature is not available. So I clicked on the trouble shooting link, and Windows complains about the incompatibility of the graphic card.
This computer problem is pretty obvious. Windows 7 installed a new graphic card driver for me which broke everything. To solve this computer problem, I simply download a driver developed by the manufacturer:
FYI, mine is nVidia GT-230M
After reinstalling the driver, everything went back to normal, and the taskbar is transparent again!
Story learned: Never install any graphic driver developed by Microsoft.