I think you're not exporting with alpha, but I'm not sure how to use those tools and when I tried they didn't work with s4s. I recommend using the old dds tools, you can find them here.
I FRIGGIN' LOVE YOU, MATE!!! This is twice you have saved me more headache then is needed, I have been looking all over for that plugin but google kept leading me to the texture tools. Somebody needs to give you a humanitarian award...still crazy about your teddy jacket, too :D <3
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