A Transition defines the way two videos are mixed.
Video transitions work when:
a) At least one video is present in both the video tracks.
b) The video transition is placed in the transition track between overlapping sections of the two videos.

In your case, if Video 1 is blank or the video files do not overlap. Therefore the transition won't show up.
You might also find our Article on Applying Transitions useful:

http://www.deskshare.com/Resources/articles/vem_applying_transitions.aspx

Note: The registered version of Video Edit Magic does not add any evaluation stamp when you make movies. If you are using the unregistered version of Video Edit Magic, it is recommended that you save the project so that you can later make the movie after registering Video Edit Magic.

---

DeskShare - Support