Having trouble creating alpha channel

I have Photoshop 7.0. I have to transfer files from Photoshop to the video editing program AVID. I know that I have to merge the layers and create an alpha channel, saved as a Targa file. But I am having problems creating the alpha channel. I have go through the steps that the help manual lists but I keep getting inverted images and I cannot get transparent files to import correctly. Where I used to work they had a one touch key to create the alpha channel. I don't have that here. If I could get someone to explain to me how I can do that it would be great. Or just how I can create the alpha channel easily. Thanks

Cheryl,

Firstly, get the update to 7.01 (free download). In 7.0 they changed the way Targa kept its transparency info. In 7.01 they reverted to the previous alpha-channel method.

You can create an alpha channel at any time by:

1) Saving a selection
2) From the channels palette selection New Channel

Or keep the 7.0 plugin and just use transparency...