I have been experimenting with applying decals to an object but have only been able to get results which render with straight sides (the shape of the jpeg). Is there a way to apply decals that have irregular outlines or a transparent backgrounds? I have searched the forums but have not found any explanations or tuts.

Textures and UV mapping.

Unwrap the faces you wish to apply the decal to. Then in the texture options place your irregular decal (with black surrounding area) into a texture channel. Under the pictures options, be sure to check use alpha so that the black area is not used in the picture. Then map that to the UV channel, and it should work assuming you have that set to color in the mapping options.