I've been playing around with UDK for awhile now, Mostly just creating various assets in 3DS Max and having a look at how they look in game.
I recently (Like hours) switched over to nDo2 from using Crazybump and I've found when exporting a .PNG and then into UDK causes it to turn orange and stretch, Also importing as a .PSD does the exact same thing.
But if I export as a .PNG then run it through Crazybump but make no difference, export as a .PNG again and then import into UDK its fine.
I'm sure it's something very simple like a single check box but nothing I have found yet.
I will tinker with the 8-bit channel settings.. I know that when I export as a .PNG it asks if I want to export in 8, 16, 24 blah blah.. I always left that as default. I assumed that anything below would degrade the quality?
What's the pro's and con's UDK wise when using .PNG and .TGA? I would assume the easiest thing to do would be to import the .PSD?