Decals

#In photoshop, go to Window>Show Layers and select your layer.

##Resize your image by going to Image>Image Size. Change the width and height fields to 32 and press OK.

##After resizing, I would suggest creating a completely black layer under your image layer to ensure there isn't any white spots on the edge of your transparencies. That is completely optional though and usually not necessary.

#Save as a .tga and select 32 bits/pixel. Anything less won't retain the alpha channel.

#To create a 64x64 decal with transparency, you will need to take an extra step using Gimp [See top of this page for a link].  

##First re-size your image to 64x64 and save it as a .tga file.  

##Then open your .tga in Gimp. You should see the transparent area as being a tinted checkered pattern.

##Go to Image>Mode and choose 'Index'. In the window that pops up, change the number colors to the minimum you think will be acceptable for your decal. The fewer colors you use, the smaller your end file will be. *'''Change the Image back to RGB Mode!!!''' Image>Mode> Choose 'RGB'. The Decal won't work if it's left in index mode.

##Go to Color>Posterize. A slider with a number going from 1 to 255 should appear. This will fine tune the number of colors you use from the previous step. Keep decreasing the number of colors until your file is smaller than 5kb. For my crossbones image, I only needed three. To keep your file size under 5KB, you will have to use 16 colors or less, and possibly even fewer than that.

##After you press ok, to to 'Save As' and overwrite your file. A window allowing you to use RLE compression should appear, press Yes and save. Check your file size.