Compression problems

[honeybadger]

While trying to make T-wolves' uniforms, I've experienced some problems when trying to save the png to dds. Squares of color appear around the originally smooth edges. It goes from looking like this:


to having distorted edges like this (mainly around the wordmark and the collar):



I've never faced this problem before, so if anyone has a solution it would be greatly appreciated.

[Kevin]

why not just paste it over to an existing dds file, merge, then save

[honeybadger]

Kevin, I've tried it but it still gives the same result. Still, I appreciate the help.