Well, the reason for your problem seems obvious: Your code assigns the effect to the whole material. So obviously it's visible on the whole model.
Code:

---

material wire{
effect="mtlly.fx"; <== remove this
skin1=front;
skin2=front3d;
flags=tangent;
}

---

If you want the effect on one skin only, remove the effect definition from your material, and store the effect in the entity skin in MED only.

Hope this makes sense.

If you then still have problems, please post again. I'll then look into your project. We should get this to work.