I am familiar with Photoshop but cannot seem to create a useable transparency in the program for use as an overlay with VF2. Something to do with the Alpha channels with which I am not familiar I suspect?????? Thanks.
Creating an alpha channel in Photoshop is a little tricky, but their documentation/help is pretty good so it shouldn't take too long to figure out.
When the image is ready, you can save the it as a .tga or .png or .psd- all of these support alpha channels. Load the file into VideoFactory, go to the media properites/media/alpha channel and set it to "Premultiplied". VideoFactory will pick up the alpha channel and handle the transparent parts with ease.