Losing transparency when saving in photoshop

[oc3]

I am trying to change the rainbow from Rainbows in Tamriel to be a little more realistic, but every time I save, it becomes opaque. The original dds works fine with the rainbow about 50% transparent. As part of troubleshooting, I simply opened the file, changed nothing,and then saved using the default DXT3 and also DXT5. Same results, !00% opaque. I tried changing the alpha flags on the mesh from 237 to 4845 with no effect. 237 should be fine since the original uses that and it works fine. I have searched high and low on the net to find a solution to no avail. The typical advice is to save as DXT5 and maybe change a flag. The problem appears to have to with the way I am saving the file. Or, perhaps Photoshop and NVidias dds plugin are not compatible with semi-transparency in oblivion. I would prefer to keep using PS but maybe I have to switch to GIMP?

 

I am really stuck here and would really appreciate some help so that I can make something that hopefully everyone will enjoy. That is if I can get the author of the original to give permission to release it. Please help.

Thanks

[oc3]

Update: When using the 2D preview in the Nvidia save dialog, the only time transparency works is with 1 bit alpha.

[oc3]

I have the solution! For some reason, my Photoshop CS4 (and possibly others) will not save semitransparent textures properly no matter what I do. ( I am using the latest Nvidia dds plugin) The fix is as follows:

1. Get DDS converter (2.1 I think).

2. Edit your file in PS and save as a PSD file(native PS).

3. Convert it using DDS converter. Read the read me file closely to figure out how to use the program. In the options, I selected DTX 5 and 4 for the number of mip maps, and enabled alpha. There is a slider for image quality-move it all the way to the right. I also used the nvisia dds option. Once the convert button is highlighted, hit "convert".

4. Your dds file should now work perfectly!

 

It's amazing how perfectly it works now. I hope this helps some people. I recommend making this a sticky if possible to whoever has that power.