Thanks both of you for your detailed answers
@panthercules:
It's strange that the flags should not be TGA's because I have recently downloaded a fairly old mod that contains high LOD flags and all of these files are to be put in the data\texture\TNormal folder and just as I was about to do this it struck me, there are no flag files here at all. BUT, the German, both naval and merchant flag, are shown in this folder, in TGA format, none of the others.