Gentlemen, I am so thankful that I got your responses. Thought I would never get a rely. The *BIG* problem is: I am using old software that does not recognize PNG, JPEG, GIF, ect. Only bmp for textures. When I tried any other format, the result looked like picture 2. Also tried using DXTbmp DXT3 and saving as bmp. Again picture 2. *Only* bmp format gives me picture 1. I just don't know all the tricks to correct this.
TrevorOutlaw, can you point me to how this can be done? Sounds exactly what I am looking for. Let me warn you guys - I am 71. Ya'll are way ahead of me. Ya'll is Texan