The images above show the problem I was having; the sprites weren’t automatically extracting.
The problem was that the colours in the background and the extra lines were blocking the engine algorithm from extracting the sprites.
The solution to this was to remove everything, but the sprites itself. This was done using the selection tool and magic wand without anti-alias on, because it selected the black outline, which would make them look blurry in UE4, from what I have experienced anyways. Here is what it was a post to do:
Game Growth 