I figured out the I was having a plug in issue. I redownloaded the plug-in that dolby recomended and it worked. I think I might have not overwritten the old 1. I am however having a new problem. The .tga image is showing up more sharp and crisp than the .dds file the best I can get it is with DXT3 and generate mip maps. Is this because of the alpha channel or is .dds just a more compressed format?
Here are some examples. The orb is .tga in both images.
TGA BARS
DDS BARS
Thanks for your input