Photoshop 7.0 lighting effects

So I'm using Photoshop 7.0, trying to create some lighting effects for RPG Maker. <_<;

My first attempt turned out looking like this...

Spoiler for:

As Malson pointed out, the areas that aren't lighted should be darker, not less saturated. The only way to resolve this would be to add some transparency, so I did. My results didn't turn out too good...

Spoiler for:

In that image, I added some transparency to the circles with the eraser tool. The only problem is that they look like solid circles that don't get darker (less transparent) as you move further away from the centers. If only I could make the eraser work like the brush tool. Is there any way to do this?

So pretty these lights are. ;o;

thats awesome ^^

<Lord_Dante> dude
<Lord_Dante> i love you
<Irockman1> ...
<Irockman1> I'm seeking help
<Irockman1> I didn't make the bottom screenshot
<Lord_Dante> ...
<Lord_Dante> oh.
<Lord_Dante> = \
<Lord_Dante> nevermind
<Lord_Dante> <.<

Yes yes you are learning yes yes

bottom scrsht <3

The bottom screenshot is what I want my results to be. I stole it.

In that image, I added some transparency to the circles with the eraser tool. The only problem is that they look like solid circles that don't get darker (less transparent) as you move further away from the centers. If only I could make the eraser work like the brush tool. Is there any way to do this?