Hi,
This thread is maybe a bit old but as there is no real solution, i probably got one for those who look for it.
After saving your DDS file, open it with XnView, a free files viewer Available on the web, M button to see your Alpha, in "image" menu (in french version... sorry) there is an option to erase Alpha.
Save and the program will replaced your alpha with a blank one without any artifact.
Et voila!
Yeah, this is a big problem with DDS...artifacts. TGA conversions don't show the artifacts, but the shading is terrible. DDS shading is great, but the artifacts ruin it's look for close up shots.
Tried the program, thanks, but it didn't work for me. Deleted the alpha, saved, but now I get a big black square for the background and the artifacts are still there. Help...
BTW, I'm working with my DRF mod, whereas, I must have transparent options for the highlighted border.