I use the same - strange thing was at the beginning - I saved some diffuse textures - ok, then went to bump... Since I did this every next diffuse texture was terribly blured with any setting. Solution for this was only reinstalling the plugin. Right after that I saved first (default) profile and now it's fine, wchich means after saving Normal Map (bump, spec etc.) I have to load saved profile...
DTX 1 does not support transparency, DTX 3 gives explicit alpha, DTX 5 - interpolated alpha. There were great explanations on the Forum not long time ago - please refer to threads:
"Texture blurring DDS" (on page two)
http://www.racedepartment.com/bobs-track-builder/32839-texture-blurring-dds.html - thanks to jharro again!
"Problem with bump, specular etc" (page 3)
http://www.racedepartment.com/bobs-track-builder/32621-problem-bump-specular-etc.html - that was me, luckily the problem doesn't happen anymore, I don't even know why it was like that. There is a link to great tutorial by Eric Tozer -
http://www.racedepartment.com/downlo...do=file&id=963
I don't know if these links work.
So, if I don't need transparency it's always dtx 1 - you get smaller files.
And then for some trees I use dtx 3 or dtx 5 (bigger files, but with transparency)
Also, the number of mip maps is sometime important if you think of file sizes. Sometime it's unnesesary to save all mip maps. I usually save 5-6 for diffuse textures and 2-3 for bump and specular. Then I never have set MIP setting in Xpack over -4...
Then if I want to have one texture disapearing in another (e.g walls on roads) it always has to be dtx 5, since there some transparent gradient must appear.
Settings for the plugin - I just play with buttons and always watch preview before saving. Usually give "soft sharpen". Anyway, I recommend the tutorial by Eric - he knows things much better
Before NVidia plugin I used DDS Converter 2 - it has less options, but very easy to - maybe you can try to save your textures with this and check what happens.