Is it possible to bring in a still image with alpha channel into vegas so i could composite it over another image? If so what kind of format do i save the image in?
Both PNG and PSD files will support 8-bit alpha channels. 8-bit alpha allows for semitransparent areas - especially useful for soft edges.
I don't have the link here but there was a good article on the Cow about alpha channels and mattes, explaining the differences between straight, premultiplied, etc, and especailly explaining how to get photoshop to recognize the type of alpha channel that Vegas exports.