@Yanzl I was trying to figure out my issue when I was using this to help create VMTs for SFM Hammer. Every texture I was creating ended up appearing invisible. It turns out I needed to change it to RGBA8888 or RGBA16161616 and not DXT1. I think that the "Convert to VTF" configuration menu would need a template for SFM textures that has RGB888 for non-alpha and RGBA8888 for alpha. An 8 bit and a 16-bit version would help. Something like SFM Low and SFM High.