@Zeckron: Couple things to help answer questions/clear things up...
Alpha channels are actually fairly easy to understand, but it requires a paradigm shift (some out-of-box thinking). Put simply, an alpha channel is like a layer mask. It's a black-and-white thumbnail which tells a program what parts of a rectangular image to show, and which parts to hide (or make transparent). Photoshop uses alpha channels in a number of ways. If you ever made a layer mask (the little gray rectangle with a white circle inside it on the bottom of the layer panel), you're using an alpha channel. Quick mask is also a derivative of alpha channels. Then there's the literal "alpha channel," a channel in the channels panel called "Alpha #" which is simply a method of storing selections. The way they work is actually very simple: Areas of an alpha channel that are black (or red in a quick mask) are areas that are selected. White (or transparent in quick mask) is areas that are not selected. Grey areas are just that--areas that are partially selected based on how dark they are (the darker it is, the more that is selected). Literally, alpha channels provide a way to "paint" your selection, providing a very accurate means of extracting detail from an image.
In the case of PNG files in retexturing, you will find that many textures include a separate PNG file with their alpha channel. In this case, imagine the alpha channel is like the one in Photoshop, but add a step. When the textures are loaded, the alpha channel is used as a mask--black areas are masked (hidden or made transparent) while white areas are visible in the game. Gray areas provide levels of transparency in the game (so that other things can be seen through the texture).
Fortunately, there is an easy way around all of this. You will notice that PNG files in the png_all folder do not have alpha channels. This is because they are actually not necessary. PNG files, unlike JPEG, BMP or TIFF can store transparency/opacity information. If you start your new texture in a document with a transparent background, and create your texture while maintaining transparency information where appropriate, then save the PNG with the appropriate address (based on the file names in the png_all folder), there is no need to create an alpha channel--the game will load the PNG's opaque pixels, and discard the transparent ones, leaving you with the same effect as if you used an alpha channel, without the confusion.
Hope that made some sense... and I hope that it helps some...
Oh yeah, if you're working on textures for things that don't move (ie walls, floors, other "rigid" objects), chances are you're better off using textures and addresses found in the ci_by_png folder. I find that to be more reliable than trying to find textures in the png_all or png_by_rgb_a folders (sometimes textures don't appear in those folders).