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Originally Posted by Yuddha
As the previous post said or implied, you can't just rely on Photoshop's Transparency feature. The feature was designed to work with many different file formats, but you'll need to use the Alpha Channel for TGA's to work.
What I do is select the part of the RGB image that I want to make visible (using a marquee or the magic wand), then flip to the channels, add the Alpha Channel, then use the paint bucket to flood the area with white. Then I "Flatten Image" and save as a TGA, 32 bpp.
Remember that the image has to be in the dimensions of a power of 2, no larger than 512.
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Woot! That worked, thank you so much!