I disagree, it is really easy to use photoshop and the NVida's plug in. Before you try to save the file as a DDS you need to make sure your file ... *loading up photoshop*:
- Is a RGB/8 - Image->Mode->8 Bits/Channel
- Flattened - Layer->Flatten Image
- Has an alpha mask if needed - Window->Layers, Channel (tab)
When you have done all of that save as a dds. In the NVIDA dds Format window:
- Save Format Section:
- Explicit Alpha (DXT3) selected
- MIP maps Section:
- Set depending on what you need, typically I use the "No MIP maps" option
- Fad MIP Maps section:
- Set the blend amount to 0%
Press the 'Save' button in the "Save Format" section and presto, you have a DDS. If you want to preview it before saving it then you can hit the '3D Preview' button. Just make sure to uncheck all of the options except for the DXT3 option.