I have the same problem with my Photoshop 7.0.1, make a shirt to have 50% opacity so its see through, and the outside shirt will have the alpha channel, but when you preivew or upload... its not see through!
I am not sure why that is, im sure there is a setting somewhere in Photoshop that was changed in a patch somewhere.
So here is what I did.. download Gimp , I use 2.0. Interface may look wierd but just look for magic wand, take your transparent .PSD file and load it up. Use the magic wand to select your pattern, then quick mask it with Shift + Q. Make sure you have the layer duplicated but hidden so it saves as transparent TGA. Save as 32 bit, no compression, origin bottom left corner and there you go.
Ya its a bit of work opening another program just to save but it gets the job done.
ALSO!!! you know that white border around your avatar maniquins (sp?)? This wont leave that. It has no feather on the selection tool, for some reason you cant go below 0.02 feather in Photoshop, atleast the version I use 7.0.1.
Have any more information or have questions let me know. Can IM me in SL, I am on alot

(If anything like this was posted before, dont burn me.. I didn't read all of the threads far back and I just want to help)
Eye Nine Designs & Studio