I dont understand what you want - if i did i would do it for you. That picture you posted - do you just want it reduced in opacity without it being blocky? Or do you just want a part of it reduced?
I mean - throw me a frikkin bone here
And the REASON it goes blocky is because thats the background showing through its not actually IN the picture, photoshop just shows you a blocky background so that you can judge its transparency.
The one here has been reduced by 50% BUT try it youself and save it - the blocks go away.