I was wondering if anyone knows how I make custom textures with transparent backgrounds with photoshop NOT GIMP!!

You'll need to get the Nvidia DDS plugin, which will allow you to export your texture as a .DDS file in order to support transparency, then save as a .DDS and select DXT5 when the save dialog appears - then all that's left is to use that image to convert the texture in assman (using appropriate blend texture settings if you want it to be a decal or blend texture), and it should appear transparent in Radiant and in-game too.

screw photoshop and screw gimp. get Paint.NET. It's WAY better than photoshop, it's free, and has native support for DDS and TGA, no plugins required.

either way, in any program, making a transparent part of texture is just using the eraser in those areas. then once you are converting the textures in assman, in the framebuffer operations section, you need to set the polygon offset to "static decal" and set the alphaTest as "GE128".

screw photoshop and screw gimp. get Paint.NET. It's WAY better than photoshop, it's free

There's a reason why Photoshop is an industry standard for image editing. I'm not saying go buy it, but if you were to obtain it, it's the best image editing program in existence. I can understand if you find Paint.NET easier to use, but there's no way its better than Photoshop if one had equal opportunity to use either program.

And yes, GIMP is literally a gimp, so I guess it was aptly named.  Don't bother ever using it.

Thanks guys got it working had to read 2 tuts one here an ZM.

Ohhhh photoshop beats any other picture editing program