Finally managed to create a tile.
Seems silly now why I struggled before!
I was looking at previous threads and the DizzyAge Manuals and I exploded a few tiles just to get my head around it and have got it working.
I've created an RGB bitmap and coloured the background red. I've then deleted the image and re-coloured the background black,
I then used tgaworks tool to implode it together to create the .tga file which is working in the map
The problem is I have quite a few images to do this with and can see this taking a while.
Originally I was using Paint.NET and I have taken screenshots of the images I need as I'm not a brilliant artist and saved them as pngs.
I deleted the background so it was the crosshatch (meaning transparent?).
I am then saving it as a .tga as Paint.NET has this option but they weren't showing up in the DizzyAGE editor.
I then tried again thinking I might have missed something which lead me to this:
When I save it as a tga there are some Settings
I selected 32-Bit and made sure Compress(RLE) WAS NOT selected and this worked.