How do i remove the background or make it transparent so title can appear over the video (overlay text)

You need to add a composite transition between the title and the clip underneath. It should actually be added automatically (at least that's what I remember happened when adding titles).

It's a pity the composite transition is really plaguing Kdenlive IMHO. It's unintuitive and makes it impossible to do things such as fade out titles or multiple titles (Kdenlive doesn't support multiple transitions at the same time, even on different clips). OpenShot (also based on MLT) for instance seems to have done compositing between tracks the right way, see http://www.openshotvideo.com/2009/04/linux-video-editing-plus-compositin... and http://www.openshotvideo.com/2009/07/stretch-squeeze-and-zoom-video-on-l....