If you're even remotely comfortable with Photoshop, stick with that. (and that's the nicest way to describe paint.net)
The main problem with the lamp system is the documentation. I don't think anyone could describe it any worse if they got paid to do it. They've made up and thrown in these random words like "tiles" in there while simultaneously describing the RGB channels (the main thing) in the worst possible way.
To get to the issues you're describing first: this is 100% an issue with having alpha channels where you shouldn't and/or color bleed (see #3 below). Unless it's a marker light, make sure your texture and mask files don't have the white alpha channels Photoshop likes to add by default.
This is probably easier explained as a Youtube vid but I'll try:
1) For the sake of simplicity, I recommend using one texture file and one mask file. Save them as .tga so Blender can interpret and preview.
2) Think of the mask file as the one that controls opacity of your light texture when the light is on - that transparency is controlled using the different channels SCS assigned to each type of light. So if you have a texture file for your low beams, and the mask is just a square with 100% blue, it will be entirely white (along with some glare) with your lights on. That same blue square at 50% opacity and obviously 50% of the light texture will shine through.
3) Pay attention to the channels. All lights have their specific RGBA channel, and bleed is what causes most weird errors. e.g. if you're making a mask for an indicator light (red), it should not be visible at all in your green/blue/alpha channel.
4) Triple check that Photoshop actually saves/doesn't save the alpha channel you tell it to. I've spent many, many days trying to figure out why my lights don't work when it turned out Photoshop ignored the alpha -or created its own- upon save.
5) Create a second UV map for the mask file. It can just be a duplicate.
6) In edit mode, select the light and toggle the intended position in the SCS Tools shelf in Blender (front/middle/rear etc. This is what they call "tiles")
That's it.
Now, that is the basics. To actually make it look somewhat realistic, you want to incorporate some of the shape into the mask. Since obviously no light is 100% consistently bright top to bottom, but rather follows the curvature and/or shape of whatever light it is. I find these to be easy to do by hand with a brush.
Just to give you an idea; here's an old style halogen low beam with its corresponding mask (focus around the bulb, and fades from there), as well as a LED indicator (each bulb bright AF)
[ external image ]