How do you make players invisible when they join the game?

Your function works, you just need to input the character (not the player). This has a super simple fix:

local function set_transparency(model, transparency)
    for _, v in pairs(model:GetDescendants()) do
        if v:IsA("BasePart") or v:IsA("Decal") or v:IsA("GuiBase3d") then
            v.Transparency = transparency
        end
    end
end

game.Players.PlayerAdded:Connect(function(player)
    player.CharacterAdded:Connect(function(character)
        set_transparency(character, 1)
    end)
end)

You would just connect to the CharacterAdded event and run each character through your function. As another thing, you don't need to redefine your function for each player! It's better to put the function outside as you can still use it for each player.

local selectedTransparency

game.Players.PlayerAdded:Connect(function(plr)
    plr.CharacterAdded:Connect(function(chr)
        delay(.5, function()
            --// Function delay to make sure the character has been added.
            if chr then
                for _,parts in pairs(chr:GetChildren()) do
                    wait()
                    if parts:IsA("BasePart") or parts:IsA("Part") or parts:IsA("MeshPart") or parts:IsA("GuiBase3d") or parts:IsA("Decal") then
                        selectedTransparency = 1
                        parts.Transparency = selectedTransparency
                        wait()
                    else
                    if parts:IsA("Accessory") then --// Ghost Mode
                        parts:Remove() --// Don't have to add this.
                    end
                    end
                    for _,parts_2 in pairs(parts:GetChildren()) do
                        if parts_2:IsA("Decal") then
                            parts_2.Transparency = 1 --// Will remove the face
                        end
                    end
                end
            end
        end)
    end)
end)