When I set the INVISIBLE flag the WMP entity is invisible but still has collision. I have never seen that this does not work.

NONE is not what you want, its a surface flag that makes single surfaces invisible but the WMP entity itself is still rendered, and costs rendering time.

Maybe some other setting of your entity prevents invisibility. What other flags have you set?

If the flag does not work in some special for you case should post a bug report and describe under which cisrcumstances it does not work. NIVISIBLE must work in all cases or else it would be a serious bug.