I've searched for an answer to this and have found similar problems, but not solutions (at least not for this specific issue).
Here's the situation: I have a flash navigation (wmode="transparent") that sits in a div, and the drop downs appear above any html below it. So far so good. Then I have another swf (wmode="transparent") on the page in a div (z-index 1) below the nav div (z-index 2).
In both FF and IE everything looks okay - the drop downs appear over top of the second swf - but in FF I can't click on the button in the second swf. I can in IE but not in FF.
In Safari when you roll over the button in the second swf, the mouse cursor rapidly strobes between arrow and finger as if it's having a nervous breakdown - and you can't click on the button.
Any thoughts on how to correct this?