Here's how I make an alpha channel in GIMP, starting with a relatively arbitrary image. Ideally the background is the opposite of the item (i.e., light colored item on black background, or dark item on white background), but often it's not quite the case. My method handles all cases, but of course you have the most trouble when the background is a similar shade to the item.
Open the picture in GIMP. I assume we're starting with a jpg or gif, so there's no alpha channel to begin with. Later I'll cover the case where there is an alpha channel and you want to touch it up or fix a problem you didn't notice when you created it earlier.
I'm using GIMP without the stuff that makes it try to look like Photoshop.
1) Menu "Layer -> Mask -> Add Layer Mask ...". A popup appears; select "Grayscale copy of layer". If the background is light, also select "Invert Mask". Hit OK.
2) Menu "Layer -> Mask -> Show Layer Mask" (put a check mark there). Now you're looking at the transparency mask -- what will eventually become the alpha channel.
3) "Layer -> Colors -> Threshold". Drag the slider until you get the best results where there are few or no speckles in the black background, and the foreground is mostly white. Black will be transparent, white will be opaque (your image). In difficult cases you may find you want to skip this step -- use your judgement.
4) In "The GIMP" panel, double click the foreground and background colors to make them black and white. (It doesn't matter which is which, because you'll be switching them.)
5) Use the pencil and paintbrush tools (with appropriate brush shapes -- I use circles of different sizes plus a few bigger circles I added) to make what's clearly background black and what's clearly foreground white. Skip any areas where you're not completely sure whether it should be transparent.
Note that if you click one of these tools and then shift-click another spot, it's like dragging the tool in a straight line from the first spot to the second. This is a real time saver.
Also note the little arrow thing by the foreground/background colors in "The GIMP" panel -- that swaps foreground and background colors. There's also some shift-like-key to do this temporarily, but I never seem to find it.
6) When you have the bulk of it done and now need to actually see the item to touch up, use "Layer -> Mask -> Show Layer Mask" again (unchecks it). Now you can see your image, with the gray checked background showing wherever the image is transparent.
7) Continue using paint and pencil tools, zoom in and out (shift-mousewheel), and handle the fussy parts. Remember that painting black makes it transparent and white makes it opaque.
I find that gray on the edges is often helpful in making an image work better in SL. This is particularly true for images that seem to have lines at the edges that aren't the background color but aren't really the item -- they're "inbetween" colors caused by JPG compression earlier in the process, or other reasons. If I try to just make them invisible, I find I get odd jagged edges. Instead I use the edge of the paintbush tool (which blends as it paints) or sometimes paint a gray shade here or there to help these lines fade out but not completely disappear.
When you're happy with the results, we're ready to flatten, resize, and export as TGA.
"Layer -> Mask -> Apply Layer Mask". After you do this you won't see any difference. This bakes the transparency mask into the alpha channel. Why it doesn't put it there in the first place I have no idea, but that's how it works in GIMP. No doubt they have a good reason.Now, save the image GIMP project, in case you want to make adjustments later. Use "File -> Save As", and replace the original file extension with "xcf". If you forget that, just "Select by file type", and it's the top one.
9) Resize appropriately for SL. You may have been working on a full-resolution image, and if so you need to resize it to download quickly ingame, so your objects rez quickly. (Image size issues are covered quite thoroughly in a sticky post on this forum.) To resize, use "Image -> Scale Image". A "Scale Image" panel appears. I generally put 64, 128, or 256 in one of the boxes and let GIMP calculate the other box under "Image Size". Under "Quality", select Cubic -- no point in being sloppy here, it works plenty fast.
10) Save as TGA file: use "File -> Save As", and replace the extension with "tga". Bingo. Leave the origin as lower left, and I disable compression. (Compressing the image may speed uploading time, but won't affect anything other than that except reducing image quality somewhat.)
11) Upload the image and have fun!
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