Decals:

Decals sit on top of the Texture Stamp and Detail Textures.

Like objects, decals are selected from a tray list and placed using the left mouse button. They are also rotated by moving the mouse while holding down SHIFT+Left Mouse Button, and similarly they are scaled with SHIFT+Right Mouse Button.

Decals can be moved by clicking the left mouse button and dragging, and can be layed on top of each other. Layer order of decals relative to each other is decided by alphabetical order of the file tree branches. For instance, decals from JUNGLE will sit on top of anything from ALL, but below anything from URBAN. Within each branch of the decal file tree, again, the layer order of decals follows alphabetical order.

So bear that in mind when you're creating custom decals: choose the final directory name before you place them all over and realise you have to redo it because a standard decal you want underneath them is sitting on top!

Custom decals:

Like detail textures, decals must be saved as DDS or TGA at base2 resolutions (Typically 128*128, 256*256, and 512*512).

Any custom decals you make should be saved in this location: [game directory]\WH40K\Data\Art\Decals\[your_folder_name]

Once they are saved there, the ME will find them upon loading and add them to the branching list of decals in the tray. They will not show up as you save them if the ME is already open, you must save them there then load the ME to have it detect them.

The edge pixels of all decal alpha channels must be pure black, i.e. transparent, to prevent odd projections such as these:

Decals can be saved in DDS or TGA image formats. TGA decals will show up in the preview window of the ME tray, DDS will not. Most of the decals that ship with the game are DDS files. As stated in the Detail Textures section, a comparison of texture formats and resolutions can be found in part 9.

If you save your decals as TGA files, they must be saved as 32 bit to have the alpha channel. PhotoShop 7 has bug that makes it impossible to save TGAs with alphas, more info and a fix are avaliable at these locations:
http://wiki.beyondunreal.com/wiki/Adding_Alpha_Channel_To_TGA_Files
http://www.adobe.com/support/downloads/detail.jsp?ftpID=1544