Background transparency toggle button should get same result, no matter rotate image or not but a defect in Raster Design 2011 makes transparency not possible to turn off as expected when the image is rotated.
A reader contacted me about this issue and Autodesk quickly confirmed the bug and provided a workaround I wanted to share.
Workaround: Invoke Transparent Color dialog again and click OK button. (Don’t change color, keep it as previous.) The transparent color will go back to normal.
Another workaround is: Since the bitmap uses Indexed color, redefine transparency (may need a third party image editing software) and reload the image into AutoCAD will fix this problem.