Hahahaha! The long story is just that Object A must be behind Object B because there is another object (Object C).
Object B is the rooms shadow, which is in front of everything.
Object C is the players character which must be behind the shadow.
Object A is the 'select square thing' which I want to be behind the character, but not effected by the shadow.
So... Object B (shadow) is at the front and Object C (player) is behind it.
But... I want Object A (square) to be behind Object C (player) but in front of Object B (shadow) (or simply just NOT darkened by the alpha channel of the shadow)
It's just not going to happen that way. It's kinda impossible to do.
UNLESS! You split the "select square thing" into 4 separate objects. One for each corner of the selector. Then just handle their Z-placement separately.
Eg. If player is overlapping "corner" make "corner" invisible.
I tried that, but because of shadows caused by various alpha channels, the 4 objects would at times be different shades and it didn't look good.
Anyhow, none of this is a problem because I have decided not to use "Select Square Things". They cluttered the screen and were ugly. I just use them for doorways now and it is very stylish. I'll post an alpha version of my project once I finish the first zombie and finish a few character animations.