VTF Edit is the best I've found, I suggest using GIMP or Photoshop to create .tga file and use alpha channels to get transparencies.
Transparency Tutorial for Source
You can use TGA, yeah. You don't even need vtfedit to do it, but if your spray isn't working properly as a tga, import the tga into VTF Edit and follow their guide (or ask for assistance here, I can walk you through it fully if you would like me to) and it should work properly.
I just use TGA for my sprays and so far only one hasn't worked properly where I needed to use the VTFtool.
No problem sweetie, if you encounter any issues just post here. :3alright then, thanks.