1) First off, use photoshop or gimp. I use gimp for sprays because it's quick and easy and doesn't eat my processer up like candy on halloween.
2) Now, open your image in GIMP. The best way to convert images without stretching is to do the following:
- At the top, select Image>Scale Image... and change the highest variable (width or height) and change it to 256. Make sure the lock is on so that the opposite variable will change with it. Click Scale. (If neither of your variables are above 256, skip this step)
- Next do the same, except select Image>Canvas Size... and UNLOCK the lock setting mentioned in the previous step. Now change the variable that isn't 256 to 256 so that both are the same. Under offset, click the center button. Click Resize.
- If done correctly (and transparency is set as default background, which usually is), you should have what you need to make a spray. Go to File>Save As... and save it as <ImageName.TGA>. Make sure it's a TGA file.
- Download VTFEdit.
- Run it, File>Import and select your TGA file.
- Leave default settings, click OK, and File>Save As... and save your file (as a VTF). If you added transparency, the preview should look like it is surrounded by black.