Help With Hair Texture Template

Using the SL provided "hair" template, I noticed there was an alpha channel already in there. Do I need to make sure that the actual texture is cut appropriately in Photoshop before saving? I thought the defined alpha channel would take care of the transparency (it looks correct) but when I save the image to Targa 32-bit the portions that extended over the black in the alpha channel are still there. Any suggestions or help would be greatly appreciated.

Thanks!

Make a selection using the alpha channel (Select/Load Selection), and cut away that part of the image. Alpha channels do not automatically cut portions of layers away because multiple alpha channels in a single PS file are allowed.