Try not to export as png as explained above if you have transparency at the edges the snap wont work and your not going to get precise alignment.
The dds can be any res so long as power of two e.g. 1024x1024 etc.
I usually output 512x512 frames tga and then create a 2048x2048 new file in PS, set the grid to 512, when you copy and paste your files into new file its a simple case of dragging where they go and they snap into place.
When all pasted and aligned, flatten the image and change the scale to 1024x1024 (you can leave this as 2048 if you wish but I dont think that makes the decal bigger in game, you have to change the scale in decal specs, but obviously a larger res means better image if you do scale it).
Copy the layer and create an alpha channel, paste the image into alpha to create transparency layer, save as dds or you can simply leave as tga and FPSC will create a dds for you when you run test game.
The first frame (top left) is the first in your sequence, 1-4 top row, 5-8 second row and so on.
There is no control over changing the animation start it will always play from frame 1, top left.
If you check out the next newsletter it may contain something of interest to you
