I do NOT recommend exporting them with UPaint, use Photoshop to make the alphas and export them to UnrealED directly afterward. uPaint is not needed. I recommend photoshop for making them, but you might use PSP as an equivalent. To save these textures in Photoshop you will need the "Save TGAs with an Alpha" hotfix.
http://www.adobe.com/support/downloads/detail.jsp?ftpID=1544
When making the texture, use white and grey only when making the symbol, but in RGB colour mode. It should be set on a black background and 256x256 in size. Select the black background after finishing, invert the selection, and then make a new alpha channel. Fill the inverted selection with white in the alpha channel. Save the texture in RGB colour as a .TGA file with the "use alpha" checkbox ticked.
Import the textures into a new package prefixed with TeamSymbols_, the textures should be DXT5 256x256 textures with a white symbol on top of a black alpha'd out background, colour is unneccessary as the game automatically adds it. Be sure you check the alpha checkbox when importing. Make sure the LOD Set is LOD_Interface and also make sure that UClampMode and VClampMode are set to TC_Clamp or they will might "tile" rather than centre on the object they are projected on. This is all you need to do in the editor, save the file as TeamSymbols_whatever and exit.
Use a text editor to make a new .int file in System, name it after you texture package. At the top of the file add "[Public]" without quotes. Make a new line and insert the following:
Object=(Class=Texture,Name=TeamSymbols_*packagename*.*texturename*,Description="")
Where packagename is the name of the texture package, and the texturename is the name of the teamsymbol texture in the package. Repeat this for every teamsymbol texture in the package.
Save the file, and open up UT2004 to test it. An example from me is here using the very method I described:
http://forums.beyondunreal.com/showthread.php?t=169512
