Getting a custom decal entity to work

[Homicide13]

This has become such a big problem for me that I have decided to make a thread dedicated to solving this one problem...
This is literately the last thing holding me back from finishing my story and moving on from the development phase, but I just can not get it to work.

I messed around in Blender and with some help from Your Computer, managed to get a custom decal entity kinda working, but it messed up the image for some reason.

So I tried to just see if I could get the image working as a decal, just as a starting point to figure out if it was something wrong with the modeling program or the image or something. So here is what happens when I use the image I made as a decal:

http://i.imgur.com/6Zjx5.jpg
To the left is the preview of the image, and to the right is how the image turns out.

To make it even weirder, this isn't the first time that I've made a custom decal. Here is ar ones I made using the exact same process:

http://i.imgur.com/yE8K4.png
Again, the left side is the preview and the right side is how the image turns out.

The only differance between the two images is that the one that works is 512x512 and the one that doesn't is 256x256. But this shouldn't make a difference, especially since there are images that originally came from the game in 256x256 such as liquid_green_acid.

I REALLY want to figure out how to get this to work. I've spent several days trying to figure this out, it should not be this hard. :/

[JenniferOrange]

This is going to sound weird but..
When making a custom skybox, they always say to make the image stretched and weird looking, because the game will even it out. (which it does.) The reason the acid works is (I'm guessing here) it's just a round blob and changing the size makes no difference. Yours looks funny probably because it's words. I guess just try and re-scale the image to 512x512?
BTW, how do you make custom decals? c:

[Acies]

Would you mind uploading it, either in this thread or through a pm? I would like to mess around some with it and see if I can fix it.

[Homicide13]

I actually figured it out: it's because in the material editor I needed to set it to "alpha" instead of "blend," something I did before but forgot to do again.

As for the entity, Your Computer's advice worked (though honestly I still don't know exactly how it works, I just know what to do to make it work T_T), so the problem is solved!

As for making a custom decal: I'll write a tutorial and post it in a separate thread.