yeah
DXT1 - 1bit Alpha (Single On/Off transparency)
DXT5 - 16bit Alpha (gradation transparency -shades)
ok, when you make the image a DXT5 from a DXT1 the image must include the extra 16bit table, ok. so to compensate space, you have to make one side smaller.
example
DXT1 256 x 256 (you want to turn to DXT5, so you make) DXT5 128 x 256
"remeber to tick off the 2 transparency flags" and press APPLY in the program. thats it, hopfully the bafs prased the right thing and your file still works. also i think i have 1.2.2.0, still buggy tho. if 1.0.0.9's working for yeah, your prolly fine.
>side tip
(always a good practice to make multiple copies of your work) just right drag&drop make copy of.