Photoshop 7 shipped using transparency for Targa files -- but that confused too many video users. So 7.0.1 changed back to using an alpha channel with Targa files. Also see the downloads section for Photoshop 7 that has the targa alpha channel version of the plugin available separately.
So, it depends on exactly which version you're using as to what you need to save in the Targa file.
BMP has always used an alpha channel, since the format does not support transparency.