I believe the .dds format is used with the Unreal Engine. If you go to any of the sites that deal with any Unreal Games you will find a Photoshop Plugin that also works with Paintshop Pro. All you have to do is drop the plugin in your plugins folder and it loads at program startup. It can also be found at the following link:
http://developer.nvidia.com/object/n...ure_tools.html
7th item from the top.