As per title, adding the below to remove background on Fancybox 2.1.4 works fine on Safari, FF & Chrome but not IEs. (only tested on IE8)
beforeShow: function(){
//transparent background
$(".fancybox-skin").css("background","transparent");
//remove dropshadow
$(".fancybox-skin").css("-webkit-box-shadow","0 0 0 rgba(0, 0, 0, 0)");
$(".fancybox-skin").css("-moz-box-shadow","0 0 0 rgba(0, 0, 0, 0)");
$(".fancybox-skin").css("box-shadow","0 0 0 rgba(0, 0, 0, 0)");
}