I hinted at this a long time ago and then forgot to follow up, whoops!
As the old post says, DiffuseMaterial writes to the depth buffer. This means if you draw one diffuse model and then draw another diffuse model behind it, the card knows not to draw the second one on top of the first because the first is closer. The depth buffer only knows about position and has no concept of transparency so if the first model is transparent, you won’t see the second model behind it because the depth buffer rejected it as being behind the first.
What does this mean? This means you have to sort your transparent DiffuseMaterials from back to front. If your scene is dynamic, you’ll have to do this any time the relationship between the transparent models and the camera changes. Peter gives an example of how to do this here.
P.S. If you have a lot of overlapping models (a.k.a overdraw) you can sort your opaque models from front to back. This will prevent all of the obstructed models from being rasterized and will improve performance if rasterization is the bottleneck. If you have both opaque and transparent models, first draw the opaque ones then the transparent ones.