This is not a CK question, but I am at a loss as to where else to post it - after all this is where modders congregate.

I know "enough to be dangerous" about Photoshop, and have used it successfully to mess with textures back in the days of Morrowind and Oblivion. But I am a bit out of practice, and can't seem to figure out what the correct format to save the DDS files in after I've altered them. The Nvidia plugin for PS gives me a ton of options with regards to alpha and mipmaps, and I haven't been able to find the directions on what format is appropriate for Skyrim. I obviously need to preserve the alpha channel...

And another thing. Why does alpha channel sometimes have no effect? For example, I wanted to alpha out pants texture on a college mage's robe. I opened the texture (fine), alpha channel is already present (fine), selected the area I wanted to make transparent, and on alpha channel filled it with black. Still, in the game the corresponding area did not turn transparent. Does this have something to do with the mesh?

I apologize if this is the wrong area to post a question like this, but this is where most active modders hang out, so I thought this would be my best chance to get an answer. Thanks in advance.

Without a NIAlphaProperty, the Meshpart wouldn't be transparent.

I use the option DXT5 ARGB 8bpp interpolated alpha, and Generate MIP maps, 10.
http://3.bp.blogspot.com/-9078eC8m1-o/T3bZ_dn32dI/AAAAAAAAAiQ/hipot2hDvr8/s1600/Nvidiaddssave.jpg

Not sure how to fix the problem you have, I'm still learning these things my self.

I convert my DDS textures to JPEG, edit them in GIMP, save as JPEG, and convert back to DDS. I use the FOMM BSA extraction tool to extract the DDS files and I use DDS Converter to convert them to JPEG.

That might be a bad idea, because both JPEG and DDS are not loss-less formats, so you can loose some quality at each conversion.

Great, thank you. I found a very workable tutorial on Nexus on how to add alpha channel to the mesh, too. Fun (or anguish) to come, for sure.

I'm aware the JPEG is not loss-less, but I do save at the highest quality after I have made any edits, and I only save once. The few textures I have created so far haven't been of degraded quality. Would converting to TIFF instead of JPEG be more efficient?

In short, yes but you don't have to convert anything, you can just work on the DDS textures themselves (http://developer.nvidia.com/nvidia-texture-tools-adobe-photoshop) or use the default format of your graphics editor - that will be a fully featured loss-less format.

Oh, I can just edit the DDS files in GIMP? Do I need a plug-in for that?

DXT1 is fine for diffuse maps and environment masks if the diffuse has no transparency. If it has transparency use DXT5.
DXT5 must be used for normal maps in Skyrim, since the alpha channel is the specular map. Unless your material has no specular, then DXT1 is fine for normal map too.

Yes and yes -- http://code.google.com/p/gimp-dds/ comes to mind.

You save as PNGs and use DDSopt to do all the rest for you (correct optimal conversion/compression & packaging into BSAs). No need for other tools or plugins.