I would like to have a simple Arrow (that I draw with the custom shape tool) with some nice little effects to pretty it up for my games menu.

However, I have a problem, I currently cannot support PNG or GIF, which presents a problem with transparency.

I can easily set a singular transparent colour for drawing irregular shapes in my game without a hitch.

But, try having a transparent layer (invisible), make a new layer, use the custom shape tool on it to draw anything that leaves background space (some decent space), add some effects like Bevel and Outer Glow.

Go to EDIT and Copy Merged, then paste it into MSPaint on a background colour that is not in the image or used as the background and you will see the problem.

When it applies gradient affects, it's based off the background colour, this is a problem I do not know how to solve, as when I remove the background colour itself (I personally use Fuschia), there's still bits all around the edges left of w/e background colour was used.

Well I am not sure if this will help but you can work with PNG and GIF in Adobe Image Ready CS2 I will have to restart my computer and will take a screen shot of the instructions on creating a web animation I have worked with it some but am pretty new myself I could only hope that this would help you in some way. I will get that to you soon I hope it helps.

PNG and GIF are no good, I do not have support in-game for these image formats as of yet.

I just select a colour to be transparent and it blits it for me.

The problem with using photoshop's fancy effects like adding glow or shadowing, it bases the shadow colour from the background, so if you remove the background itself and slap it on a different colour it looks crap.

well ... it looks bad at this point but i think you sould try other extention than gif and png.
if you use those pic for unmoving obj like chair and bla bla..
you can use jpg by comping it with the background that the pic with be floating upper it ....
it's only an idea...

-joe

You could try to make an alpha mask, if you do it right you can even make the edges anti-aliased. Play around with inverting , saturation and you will be able to make it look right.

Good luck ^^