Be careful because theres a couple of programs out there with similar names, but that are bad. When I view the file in Hex mode, I do see it is designated as a DXT5 file. Since XnView does not have DDS options, Its hard to ID where the problem lies. So something does not work with DXT5 version of DDS with XnView. However, when I use XnView to save as DDS it crashes. Then, if you need an uncompressed 4k skin (8.8.8.8 ARGB), open this dds file, copy the alpha channel to your original PSD, make the necessary adjustments in the skin to look like the dds file & save it under 8.8.8.8 ARGB in the same location, zip it up & you're good to go. When you open a dds, it will have info at the bottom saying the 'dds format and amount of mips'. Yes, DTX5 works when I use the NVidia plugin for PS. It accepts png format skins & delivers a nice little pack of DXT5 compressed skin with alpha and all the essential files & folders to make it work ingame. It works on Height2Normal algorithm, so source image must have darker parts representing the 'deep' and lighter parts as elevations. NVIDIA Plug-ins for Adobe Photoshop have two main components: NormalMapFilter filter for Photoshop that can convert any image to normal map. If you want to save the skin in png format and don't want to bother with alphas and mipmaps, use ETS2 Studio. Nvidia Normal Map Filter and DDS Plug-in 圆4 ( 64bit ) for Photoshop. Your dds.file & the skin ingame should be fine then. Do as Smarty mentioned i.e., add a black background & make an alpha channel. Included are a set of utilities for manipulating DDS image files, including: nvDXT, a command-line binary version of the nvDXT library, detach, a tool that extracts MIP levels from a DDS file, stitch, a tool that recombines MIP levels into a single DDS file and readDXT, which reads compressed images and writes TGA files. The tools are listed below, with a description for each tool. I am puzzled to know that the texture ingame too comes out like the RGB channel which should not be the case (haven't tested myself). This page contains several useful texture manipulation tools. I tested your texture with DXT5 and probably done it the way you have & here's what we got I'm curious to know why & how you are seeing mipmaps in the skin.dds file.

Nvidia photoshop dds