Flame Eye and Transmutation Stones
Did you actually complete the transmutation or did it just look like it would lose the upgrade in the preview window?
When you transmute the skin of a common/non-upgradable item onto another item that can have an upgrade, the selection for the upgrade will not appear. However, if you complete the transmutation, the upgrade from the higher level item will be present in the finished product.
Thank you for your input on the matter.. It worked as you had stated, it just was not appearing as such in the transmutation window. I just wish it was made more clear and had feared of making a mistake in the process. Perhaps a change in the UI on it would have stopped such a confusion from happening in my case.