I figured it out. The tga / dds uses Alpha channels to tell it what sections of the image to use and what sections are invisible. If you have Photoshop CS2, go to where the "Layers" window is and there should be a Channel tab on it. Click that, and at the bottom of the list you should see "Alpha" as an object. Click the Eye button to show it. If the whole image turns white, that means the whole image is mapped to be shown. Use brush tool (black) to erase the sections you want to be invisible and leave the part of the image you want shown as white (probably better to work from an entirely black alpha map and fill in parts you want to be shown).
Hope that helps.