First - I hope you are not using DX10 Preview - a lot of stuff won't work right with that mode.
For DX9 - FSX SP2 / Accel changes the way alpha channels in prop textures are used
Easiest way - copy the prop texture from the default King Air or Dash8-100 over to the Howard 500 folder - rename the orig Howard texture with .BAK and rename the copied texture to match the name of the Howard texture. (Or the Goose or one of the other props - play with it until you find the one you like.
While .DDS is the proper extension for files with DXT file compression - the extension .BMP works file in FS - especially with DXT1 and DXT3 files.
Be aware that both those textures are DXT5 textures. I've seen some reports about issues when several different file format textures are in an aircraft texture folder.
You may need/ want to convert the DXT5 prop texture to DXT3 with DXTBMP by Martin Wright - http://fly.to/mwgfx/
It's a utility everyone should have.
@ PawPaw's house - near KADS, Addison, Texas, USA