One method of propagating light ions from beam generating diodes to ICF targets in a fusion reactor is to use laser-guided plasma discharge channels to magnetically guide the ions. Earlier studies of different cavity gases (argon, nitrogen, helium) for the LIBRA reactor study indicated that the lower atomic number gases (helium) were most suitable for plasma channel formation. We found unacceptable channel expansion due to radiative transfer where the radiation transport was calculated with a multigroup diffusion computer code. A new set of simulations using a newly developed adaptive-grid radiation magnetohydrodynamics scheme with a multigroup discrete ordinates radiation transport method has led to lower absorption and emission by such thin plasmas. Application of the new scheme to LIBRA thus shows the feasibility of using argon and nitrogen as well for the channel plasma. Higher atomic number gases more strongly attenuate the x-rays coming from the target explosion. Also, by using an adaptive grid, the new scheme provides better accuracy and resolution where it is needed in the channel. The discharge current required to form the channel is found to be 70 kA as opposed to 100 kA predicted by earlier calculations. This will have the effect of reducing the required discharge voltage and thus will ease the problem of electrical breakdown between the channel and the target chamber wall.