Ok, so it's not that hard to make a transparent spray, it's pretty easy really, and I'm here to show you what you need to do, and the way I do it. Right now I do not have Photoshop CS3 so I can't make a good screenshot for things, but I will explain it as best as possible.
Not much is really need, just a graphing program. I use Photoshop CS3, and I will be using that for this tutorial, if you would like to use Photoshop CS3, but you are having problems, then just tell me over PM and I'll help you out. Also you will need VTFedit but if you have Photoshop (Like you should if you read this tutorial) you can use the plug-in.
Ok the first thing you need to know is that sprays can only be certain size, and it might have to be a power of 2 (Meaning that it has to be an even number basically) so now what you need to do is decide what you are going to make, after that, try and make your background a color that isn't on your spray at all, this will make life A LOT easier.
After you have created your spray, take and use the magic wand tool and select all of the background, now right click and choose to select the invert of what you have selected now. Ok, in your layer pallet, there will be a tab that says Channels, click on that and create a new channel, this will be your alpha channel. You should still have a selection still there, now hit Ctrl + X. Afterwards save it as a .PSD, and then save it as a .tga.
I know I say that this step is optional, but there have been reports that some games like TF2 have problems with .tga files, in which case this step is required. So, you have two options, don't do this step and hope that it works, or do this step and if you did everything right, it will for-sure work.
Now comes the easy part, open VTFEdit, and import the .tga you just made. Now when it loads (It might take awhile and if it says it's not responding, just let it go for a bit) just save it as a .vtf, and put it into your .vtf in this directory:
Program Files/Valve/Steam/SteamApps/YourName/Counter-Strike Source/Cstrike/Materials/VGUI/Logos/
Then you are good to go, just selected from options in game!
Note: If you have the plug-in, you can just save it as a VTF from Photoshop.
I want to personally thank Justin_Chan for all his help. Although it was a few things that were not needed, it has shown me that there are people who really do read what I write and do not mind helping me. So Justin, I want to say thanks for the help and I'm hoping I can make more tutorials later on!
Just PM me what you want to know/learn/do and I'll try my best to make a tutorial on it just for you (And anyone else who requested the same thing). But, what about those tutorials that are already out that I can't understand? PM me the link to the tutorial and I'll go over it, and then rewrite it personally step by step for you guys so you can figure it out yourselves!