From: Eirynne Sieyes
Sorry for the miscommunication.
I'm not "flattening;" I "merge visible."
Same thing. Don't do it.
TGA files are inherently layerless. Whether your working document has one layer or a million layers, the exported TGA will turn out exactly the same. When you flatten (or "merge", or whatever you want to call it), you're not affecting your TGA output in any way, but you are destroying your ability to edit your work easily if you need to.
Here's a simple example of why not to flatten. Let's walk through the steps real quick for making a simple stop sign. The problem with flattening will present itself as we go, and I believe so will your answer for how to use the de-haloing layer.
First you'd make a red octagon. Then you'd put the word "STOP" in white text over the top. Then you would make an alpha channel with the octagon area white, and the background black, so that only the octagon part is opaque on the texture. Finally, you'd put a solid red background layer behind the whole thing to prevent any haloing.
That's where you should stop and export to 32-bit TGA, but let's say you go one step further, and you do that flattening you were talking about before you export. Now, you upload your image to SL, apply it to an in-world road sign, only to discover you've got a typo. Instead of "STOP", you apparently had typed "SLOP". How the heck do you fix it? Since you flattened your layers you can't; all you can do is start completely over, and make a whole new image. If you hadn't flattened, you could simply edit your text layer to correct the spelling, and then resave a new TGA, and all would be well.
I recommend you always archive your layered work, either as PSD or in PSP's native format. Treat your TGA's just as output product, which is all they are.
And does that clear up your de-haloing confusion? The transparency data for your TGA output is stored in the alpha channel. The layer transparency you can see in PSP is a completely different thing, which has nothing to do with it. You don't want to see any visible transparency when you export to TGA, or you will end up with a halo. To prevent haloing, make sure you've got a completely opaque background with similar coloring to what's in the foreground. Don't fret over the fact that you can't see the transparency. As long as the alpha channel is there, the transparency will be there in SL.
If you'd like to know why it works that way, by the way, it's because of the nature of what alpha channels are, and the fact that PSP is pretty smart program, far smarter than SL when it comes to 2D raster graphics. Technically, the alpha channel doesn't have to mean transparency. It could mean literally anything. It's just a data map. As I've often mentioned in the past, you can even use alpha channels to calculate your taxes if you're so inclined.
Interpreting the alpha channel data to mean transparency, or anything else, is the job of the specific program reading the file. Second Life, and most video programs, happen to be set up to interpret the fourth channel in TGA files to mean transparency. That's all they know. PSP, on the other hand, won't do that by default since it knows a whole heck of a lot more about how images work, so it's smart enough to understand that that fourth channel could have any number of purposes. It makes no assumptions.
If you've got a properly made alpha channel in place, you've got your transparency map for SL in place. Don't worry about the fact that PSP isn't showing it to you.
If for some reason you do want to see the alpha transparency inside PSP, there's an easy way to do it. Simply put all your layers into a group, and apply the alpha data as a mask on the group. Just be sure to delete the mask, or at least turn it off, before you export to TGA. Again, TGA's are layerless, so they can't understand layer masks. Keeping the mask turned on at the time of export will put you right back into halo land, and you don't want to go there.