Thank you guys SO much for all your suggestions and input. I tried various things that were asked so let me give results and tell you what I have found out so far...

-I went to render globals and turned off alpha channel and it was to no avail, still the same problem.

-I have photoshop CS on windows, so I am not sure what the deal is, it should work fine like you said pbman (by the way, thanks a TON for all your research.)

-I tried tiff, targa, and Photoshop outputs and they all give me the same result

-One thing I tried that makes me wonder, is I was using a car paint shader that comes with Mental ray. I changed the shader to a regular blinn shader with some slight modifications and walaa, it worked. I wonder why it makes the dark spots transparent on the car paint shader? Oh well I figured out a way to get around it.

Thank you guys so much for all of your help!!!!