I have my alpha blending states setup like this:

I than draw the ground and than a bunch of spheres above the ground in wireframe mode with an alpha of 0 (as a test to show the problem). If the lines are not above the ground (there not being blended with the ground) than they are in fact invisible. However if they are being blended with the ground with an alpha of 0 than they show up as white or blueish lines. Why is this happening?

Your alpha test is wrong.  Use these settings:

            device.RenderState.AlphaBlendEnable = true;
            device.RenderState.SourceBlend = Blend.SourceAlpha;
            device.RenderState.AlphaSourceBlend = Blend.One;
            device.RenderState.DestinationBlend = Blend.InverseSourceAlpha;
            device.RenderState.BlendFunction = BlendFunction.Add;
            device.RenderState.AlphaDestinationBlend = Blend.InverseSourceAlpha;

            //  don't write z depth if there is no alpha
            device.RenderState.AlphaTestEnable = true;
            device.RenderState.AlphaFunction = CompareFunction.Greater;
            device.RenderState.ReferenceAlpha = 0;

Changing that long with drawing the alpha blended content last fixed it. I forgot that you have to draw the alpha stuff after the solid stuff and that you have to sort the stuff out.

Thanks.