shoot
Use photoshop to create your decals or some other proggy that supports 32 bit TGA, make sure that you start with a new image with a full transparent background place only the moving elements onto this background and then save it as a 32 bit TGA.
e.g. Look in files/gamecore/decals open the decal.dds with DDS converter 2 or use the Nvidia tools in photoshop,.
You will notice that the decals have a black background this is not actually the colour black but the alpha layer with full transparency so make sure you dont include the colour black when creating your decals.
The difference between the dds file and a TGA file is that dds is 32bits per channel with four channels and the TGA is 8 bits per channel with four channels, yes its a complicated subject but just try the first part of this post
This should get you started, if you know how to use the image progs if not then there is a lot more that you need to learn.
cheers
I have just had a quick search on the forum and I can see that there is a need for a complete explanation of rgba and what constitutes a 16.7 million colour image with alpha.
there just has to be light at the end of the tunnel, even if its only a birthday candle....and cake!