I'm having a problem setting my images as transparent. When I made the sprites i made the background 255,0,255 and when I set image colorkey it does nothing... How do I make my image transparent??

SET IMAGE COLORKEY will only work if the image format does not have an alpha channel of its own. If it is doing nothing, then you are probably using a .PNG, .DDS or .TGA image and DBP is using the alpha channel of the image.
So, you have two options:
1) Save the image as a .BMP
2) Save the image with a transparent background.

I would recommend option 2.

How do i save it with a transparent background? I use microsoft paint...

oh ok, thanks. Also can someone tell me how to change the background color. ink obviously doesn't work...

EDIT: sorry for the double post

EDIT: When i set its colorkey it isn't even really setting it as transparent... It's just making the part i want transparent the background color. There is stuff behind it that is not being shown...

One things i have found with transparency is that PNG works the best. I have tested JPG, BMP and PNG and only PNG does a decent job with transparency.

The one thing you need to make sure of is that the area you want as transparent is done with the same exact color you used in your set image colorkey. I use Photoshop for all my graphics and have had no problem with it.

Lord SilverStone