...
The following field indicates whether to distort an image using the procedure. This is used for water, lava and all that good 2002 "animated texture" stuff. If this field is set to 1, it requires that an image be provided for this texture. Also, if this value is set to 1, all channelscale and channeltranslate values will be ignored. Default is set to 0.
Note the maximum texture size for using distort 1 is 256x256 (anything above may crash the game) - this is a hardcoded limited in the game engine itself. An alternative is to use spritesheets and emitters. The frame to be used is selected in the emitter properties, not the TXI however.
distort 1
DistortAngle
If this value is set to 1, the texture distortion occurs in an angular fashion. If 0, distortion occurs in a linear fashion. Both are valid but can produce different distortion effects. Default is set to 0.
...