Make a bmp image 128x128 pixels 256 colors and stick it in
addons/art/textures/TeamLogos
Then copy entities/insignia/lda.ent into
addons/entities/insignia
If you donot have the addons folders, make them.
for this example, change the name of the file to "myflag.ent"
the "myflag" type and name should match the filename.
and change the contents (bold faced and underlined typeface):
class = insignia
type = myflag
name = myflag
texture = textures/TeamLogos/what-ever-your-image-file-is-named.bmp
mesh = bannerh.lwo
mesh1 = bannerm.lwo
mesh2 = bannerl.lwo
cullface = 0
smoothshade = 1
Perturb = 0.5
PerturbScale = 1
PerturbSpeed = 2
Rotation = 0, 20, 0
solidlight = 0
sizebias = -2
Thats it.
NOTE:
You cannot use your flag while playing on servers which donot have your flag. It will cause significant lag for everyone else.
If you plan to host it on your own server, be sure that players can download it as the bmap will not get synched.