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Drawing sprites messes up my model in XNA4

I have a model which draws correctly in XNA4. However if I try to add a background image (or any sprite), the rendering of my model is messed up. There are two problems with the rendering model is ...
7
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2answers
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How do I use depth testing and texture transparency together in my 2.5D world?

Note: I've already found an answer (which I will post after this question) - I was just wondering if I was doing it right, or if there is a better way. I'm making a "2.5D" isometric game using OpenGL ...